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BSX Q3 Earnings Top, Stock Down in Premarket as Operating Margin Falls
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Boston Scientific Corporation (BSX - Free Report) posted adjusted earnings per share (EPS) of 63 cents for the third quarter of 2024, up 26% from the year-ago figure. The figure beat the Zacks Consensus Estimate by 8.6% and also exceeded the company’s adjusted earnings per share guidance range of 57-59 cents per share.
The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring and restructuring-related charges, among others.
Reported EPS for the third quarter was 32 cents, reflecting a 5.9% decline from the year-ago quarter figure.
Third-quarter revenues of $4.21 billion improved 19.4% year over year on a reported basis and 19.5% on an operational basis (at a constant exchange rate or CER). Revenues grew 18.2% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments).
The top line exceeded the Zacks Consensus Estimate by 4.5%. The quarter’s top-line performance also exceeded the company’s projection of 13-15% growth on a reported basis (same organically).
Boston Scientific Corporation Price, Consensus and EPS Surprise
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, shares of BSX dropped 2.3% in pre-market trading today.
Q3 Revenues in Detail
In the third quarter, revenues rose 23.5% in the United States on a reported basis (same operationally).
Reported revenues rose 15.2% in the Europe, Middle East and Africa (EMEA) region (up 14.3% operationally) and 12.1% in the Asia Pacific zone (up 12.3% operationally).
Reported revenues increased 9% in Latin America and Canada (up 15.1%).
Reported revenue growth in emerging markets was 15.2% (up 16.8% operationally).
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. Cardiology and Peripheral Interventions sales, its sub-segments, were $2.13 billion (up 29.3% year over year organically) and $602 million (up 10.3%), respectively, in the third quarter.
Within MedSurg, Endoscopy generated revenues of $678 million, up 7.4% organically.
Urology revenues were $532 million, reflecting organic growth of 10.4%.
Neuromodulation within MedSurg reported $268 million in revenues, reflecting a 2.7% rise organically year over year.
Margins
Gross margin in the third quarter improved 5 basis points (bps) year over year to 68.8%. There was a 19.2% rise in the cost of products sold to $1.31 billion in the reported quarter.
Selling, general and administrative expenses rose 25.8% to $1.56 billion. Research and development expenses rose 14.3% to $407 million. Royalty expenses of $5 million, however, declined 55% year over year. Adjusted operating margin contracted 123 bps to 21.9% in the reported quarter.
2024 Guidance
Boston Scientific updated its full-year guidance and provided its fourth-quarter 2024 projections.
Full-year net sales growth is expected to be approximately 16.5% on a reported basis (up from the earlier expectation of 13.5-14.5% growth) and approximately 15% on an organic basis (13-14% growth projected earlier). The Zacks Consensus Estimate is currently pegged at $16.26 billion, indicating a 14.2% rise from the 2023 reported figure. Full-year adjusted EPS is expected in the range of $2.45 to $2.47 ($2.40 to $2.42 estimated earlier). The Zacks Consensus Estimate is currently pegged at $2.40.
For the fourth quarter of 2024, revenue growth is projected in the range of approximately 16.5-18.5% on a reported basis (up 14-16% organically). Adjusted earnings are expected in the range of 64-66 cents per share. The Zacks Consensus Estimate for fourth-quarter earnings and revenues is pegged at 64 cents per share and $4.25 billion, respectively.
Our Take
Boston Scientific's third-quarter 2024 adjusted earnings and revenues exceeded the respective Zacks Consensus Estimate. The company registered a strong year-over-year improvement in sales, indicating solid market share gains in legacy businesses across all geographic regions despite macroeconomic odds.
Organic and operational revenues at its core business segments increased in the reported quarter. The company’s raised 2024 guidance and an optimistic fourth-quarter forecast are expected to increase investors’ confidence in the stock.
However, rising expenses put pressure on the company’s operating margin.
Zacks Rank and Other Key Picks
Boston Scientific currently carries a Zacks Rank #2 (Buy).
Globus Medical’s shares have gained 45.4% in the past year. Estimates for the company’s EPS have remained constant at $2.84 for 2024 and $3.34 for 2025 in the past 60 days. GMED’s earnings beat estimates in each of the trailing four quarters, delivering an average beat of 12.11%. In the last reported quarter, it posted an earnings surprise of 10.3%.
Estimates for Baxter’s 2024 EPS have remained constant at $2.96 in the past 30 days. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 3.74%. In the last reported quarter, it delivered an earnings surprise of 3.03%. Shares of the company have risen 12.4% in the past year.
Estimates for Masimo’s 2024 EPS have risen 0.3% in the past 30 days. Shares of the company have surged 80.4% in the past year compared with the industry’s 26.2% growth. MASI’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 4.1%. In the last reported quarter, it delivered an earnings surprise of 11.7%.
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BSX Q3 Earnings Top, Stock Down in Premarket as Operating Margin Falls
Boston Scientific Corporation (BSX - Free Report) posted adjusted earnings per share (EPS) of 63 cents for the third quarter of 2024, up 26% from the year-ago figure. The figure beat the Zacks Consensus Estimate by 8.6% and also exceeded the company’s adjusted earnings per share guidance range of 57-59 cents per share.
The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring and restructuring-related charges, among others.
Reported EPS for the third quarter was 32 cents, reflecting a 5.9% decline from the year-ago quarter figure.
Third-quarter revenues of $4.21 billion improved 19.4% year over year on a reported basis and 19.5% on an operational basis (at a constant exchange rate or CER). Revenues grew 18.2% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments).
The top line exceeded the Zacks Consensus Estimate by 4.5%. The quarter’s top-line performance also exceeded the company’s projection of 13-15% growth on a reported basis (same organically).
Boston Scientific Corporation Price, Consensus and EPS Surprise
Boston Scientific Corporation price-consensus-eps-surprise-chart | Boston Scientific Corporation Quote
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, shares of BSX dropped 2.3% in pre-market trading today.
Q3 Revenues in Detail
In the third quarter, revenues rose 23.5% in the United States on a reported basis (same operationally).
Reported revenues rose 15.2% in the Europe, Middle East and Africa (EMEA) region (up 14.3% operationally) and 12.1% in the Asia Pacific zone (up 12.3% operationally).
Reported revenues increased 9% in Latin America and Canada (up 15.1%).
Reported revenue growth in emerging markets was 15.2% (up 16.8% operationally).
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. Cardiology and Peripheral Interventions sales, its sub-segments, were $2.13 billion (up 29.3% year over year organically) and $602 million (up 10.3%), respectively, in the third quarter.
Within MedSurg, Endoscopy generated revenues of $678 million, up 7.4% organically.
Urology revenues were $532 million, reflecting organic growth of 10.4%.
Neuromodulation within MedSurg reported $268 million in revenues, reflecting a 2.7% rise organically year over year.
Margins
Gross margin in the third quarter improved 5 basis points (bps) year over year to 68.8%. There was a 19.2% rise in the cost of products sold to $1.31 billion in the reported quarter.
Selling, general and administrative expenses rose 25.8% to $1.56 billion. Research and development expenses rose 14.3% to $407 million. Royalty expenses of $5 million, however, declined 55% year over year. Adjusted operating margin contracted 123 bps to 21.9% in the reported quarter.
2024 Guidance
Boston Scientific updated its full-year guidance and provided its fourth-quarter 2024 projections.
Full-year net sales growth is expected to be approximately 16.5% on a reported basis (up from the earlier expectation of 13.5-14.5% growth) and approximately 15% on an organic basis (13-14% growth projected earlier). The Zacks Consensus Estimate is currently pegged at $16.26 billion, indicating a 14.2% rise from the 2023 reported figure. Full-year adjusted EPS is expected in the range of $2.45 to $2.47 ($2.40 to $2.42 estimated earlier). The Zacks Consensus Estimate is currently pegged at $2.40.
For the fourth quarter of 2024, revenue growth is projected in the range of approximately 16.5-18.5% on a reported basis (up 14-16% organically). Adjusted earnings are expected in the range of 64-66 cents per share. The Zacks Consensus Estimate for fourth-quarter earnings and revenues is pegged at 64 cents per share and $4.25 billion, respectively.
Our Take
Boston Scientific's third-quarter 2024 adjusted earnings and revenues exceeded the respective Zacks Consensus Estimate. The company registered a strong year-over-year improvement in sales, indicating solid market share gains in legacy businesses across all geographic regions despite macroeconomic odds.
Organic and operational revenues at its core business segments increased in the reported quarter. The company’s raised 2024 guidance and an optimistic fourth-quarter forecast are expected to increase investors’ confidence in the stock.
However, rising expenses put pressure on the company’s operating margin.
Zacks Rank and Other Key Picks
Boston Scientific currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Globus Medical (GMED - Free Report) , Baxter International (BAX - Free Report) and Masimo (MASI - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Globus Medical’s shares have gained 45.4% in the past year. Estimates for the company’s EPS have remained constant at $2.84 for 2024 and $3.34 for 2025 in the past 60 days. GMED’s earnings beat estimates in each of the trailing four quarters, delivering an average beat of 12.11%. In the last reported quarter, it posted an earnings surprise of 10.3%.
Estimates for Baxter’s 2024 EPS have remained constant at $2.96 in the past 30 days. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 3.74%. In the last reported quarter, it delivered an earnings surprise of 3.03%. Shares of the company have risen 12.4% in the past year.
Estimates for Masimo’s 2024 EPS have risen 0.3% in the past 30 days. Shares of the company have surged 80.4% in the past year compared with the industry’s 26.2% growth. MASI’s earnings surpassed estimates in each of the trailing four quarters, with the average beat being 4.1%. In the last reported quarter, it delivered an earnings surprise of 11.7%.