Boston Scientific Announces Results For Third Quarter 2020

MARLBOROUGH, Mass., Oct. 28, 2020 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX) generated sales of $2.659 billion during the third quarter of 2020. This represents a decline of (1.8) percent on a reported basis, (2.5) percent on an operational(1) basis and (5.7) percent on an organic(2) basis, all compared to the prior year period. The company reported a GAAP net loss available to common stockholders of $(169) million or $(0.12) per share (EPS), compared to GAAP net income of $126 million or $0.09 per share a year ago, and achieved adjusted EPS of $0.37 for the period, compared to $0.39 a year ago.

"We have a robust cadence of new product launches across our portfolio, and in the third quarter, we delivered strong sequential improvement in our financial performance," said Mike Mahoney, chairman and chief executive officer, Boston Scientific. "I am grateful to our global team for their winning spirit and remain confident that our pipeline of products and services positions us well to continue delivering growth at the high end of our peer group."

Third quarter financial results and recent developments:

    --  Included within organic sales results is a negative 230 basis point
        impact associated with the conversion of U.S. WATCHMAN(TM) customers to
        a consignment inventory model and transition to the next-generation
        WATCHMAN FLX(TM).
    --  Reported a GAAP net loss available to common stockholders of $(0.12) per
        share and achieved adjusted EPS of $0.37. The company had not provided
        third quarter sales and EPS guidance due to ongoing uncertainty
        associated with the scope and duration of the COVID-19 pandemic.

        --  Included in adjusted EPS is a $(0.04) impact from WATCHMAN(TM)
            discussed above, offset by a $0.06 tax benefit(3).
    --  Third quarter sales declined in each of our reportable segments(5),
        compared to the prior year period:
        --  MedSurg: (2.3) percent reported, (3.0) percent operational and (1.9)
            percent organic
        --  Rhythm and Neuro: (3.0) percent reported, (3.9) percent operational
            and organic

        --  Cardiovascular: (5.3) percent reported, (5.9) percent operational
            and (10.4) percent organic
    --  Generated third quarter regional(6) sales growth/(declines), compared to
        the prior year period:
        --  U.S.: (4.2) percent reported and operational
        --  EMEA (Europe, Middle East and Africa): 0.8 percent reported and
            (2.9) percent operational
        --  APAC (Asia-Pacific): (2.6) percent reported and (4.1) percent
            operational

        --  Emerging Markets(4): (10.3) percent reported and (7.1) percent
            operational

    --  Received FDA approval for the AVVIGO(TM) Guidance System, a tablet
        platform designed to provide ease of use and accuracy when utilizing
        fractional flow reserve wires during percutaneous coronary intervention
        procedures.

    --  Received FDA approval for the high bleeding risk indication for the
        SYNERGY(TM) and SYNERGY(TM) XD Bioabsorbable Polymer Drug-Eluting Stent
        Systems (excluding the recently launched 48 mm stent size).

    --  Obtained CE Mark and initiated a limited market release in Europe of the
        WaveWriter Alpha(TM) portfolio of spinal cord stimulator (SCS) systems,
        consisting of four full-body MRI conditional, Bluetooth-enabled devices
        to provide personalized treatment for chronic intractable pain.(7)

    --  Obtained CE Mark and initiated a limited market release in Europe of the
        fourth generation Vercise Genus(TM) Deep Brain Stimulation (DBS) System
        to treat the symptoms of Parkinson's disease, essential tremor and
        dystonia by delivering precisely targeted electrical stimulation, with
        full-body MRI conditional and Bluetooth capabilities to better meet
        individuals' specific needs.(8  )

    --  Commenced the full global launch of the SpyGlass(TM) Discover Digital
        Catheter, the first single-use scope to enable physicians to take a
        single-stage approach to diagnostic and therapeutic procedures in the
        pancreaticobiliary system, including treating patients with bile duct
        stones.

    --  Initiated the U.S. launch of the SpaceOAR Vue(TM) Hydrogel, a
        next-generation hydrogel spacer that is designed to reduce the side
        effects of prostate radiation therapy, while providing clinicians with
        the added ability to view the spacer using computerized tomography (CT)
        scans instead of magnetic resonance imaging (MRI).

    --  Initiated the European launch of the ACURATE neo2(TM) Aortic Valve
        System, a new transcatheter aortic valve implantation platform designed
        to minimize paravalvular leaking and facilitate highly accurate
        positioning, for patients with aortic stenosis.

    --  Received a New Technology Add-on Payment (NTAP) designation from the
        U.S. Centers for Medicare and Medicaid Services for the Eluvia(TM)
        Drug-Eluting Vascular Stent System, developed for the treatment of PAD,
        providing eligible hospitals with incremental reimbursement for the
        Eluvia stent system. The NTAP designation is awarded to new medical
        devices determined to substantially improve the diagnosis or treatment
        of Medicare beneficiaries and went into effect on October 1, 2020.
    --  Announced an expanded investment and exclusive acquisition option
        agreement with Farapulse, Inc., a privately-held company developing a
        pulsed field ablation system for the treatment of atrial fibrillation
        (AFib) and other cardiac arrhythmias via the creation of a therapeutic
        electric field.


                        1. Operational revenue growth excludes the
                         impact of foreign currency fluctuations.


                        2. Organic revenue growth excludes the impact
                         of foreign currency fluctuations and net
                         sales associated with our Q3 2019
                         acquisition of BTG plc (BTG) for the period
                         prior to mid-August, for which there were
                         no prior period net 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, also for the
                         period prior to mid-August, as well as
                         prior period net sales associated with our
                         intrauterine health franchise, which we
                         divested in Q2 2020.


                        3. We recorded a $0.06 non-cash tax benefit
                         due to the resolution of the IRS examination
                         of our 2014 through 2016 tax years.


                        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.


                        5. 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. We have revised amounts for
                         the third quarter of 2019 to conform to the
                         current year presentation..


                        6. 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. We
                         have revised amounts for the third quarter
                         of 2019 to conform to the current year
                         presentation. 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.


                        7. The WaveWriter Alpha(TM) and WaveWriter
                         Alpha(TM) Prime Spinal Cord Stimulator
                         Systems provide safe access to full-body
                         1.5T  MRI scans when used with specific
                         components and exposed to the MRI
                         environment under the defined conditions in
                         the ImageReady(TM) MRI Full Body Guidelines
                         for WaveWriter Alpha(TM) and WaveWriter
                         Alpha(TM) Prime Spinal Cord Stimulator
                         Systems.


                        8. 1.5 Tesla MRI conditional when all
                         conditions of use are met.

Net sales for the third quarter by business and region:


                                                                                                                                                                                                  
              
             Change



                                                                                                           Three Months Ended                                                Reported                            Less:                 Operational                         Less:              Organic
                                                                                           
                September 30,                                              Basis                             Impact of                       Basis                          Impact of           Basis
                                                                                                                                                                                                      Foreign                                                  Recent
                                                                                                                                                                                                      Currency                                             Acquisitions /
                                                                                                                                                                                                    Fluctuations                                            Divestitures




     
       (in millions)                                                          2020                            2019*





        
          Endoscopy                                                                                 $
              475                                                  $
              486                                     (2.1)%                  0.9%                       (3.0)%                     -% (3.0)%


        
          Urology and Pelvic Health                                            350                                             359                                                    (2.6)%                               0.4%                (3.0)%                       (2.5)%                 (0.5)%



        
       
                MedSurg                                                    825                                             845                                                    (2.3)%                               0.7%                (3.0)%                       (1.1)%                 (1.9)%


        
          Cardiac Rhythm Management                                            465                                             478                                                    (2.7)%                               1.0%                (3.7)%                           -%                (3.7)%


        
          Electrophysiology                                                     76                                              81                                                    (6.0)%                               1.5%                (7.5)%                           -%                (7.5)%


        
          Neuromodulation                                                      216                                             222                                                    (2.5)%                               0.5%                (3.0)%                           -%                (3.0)%



        
       
                Rhythm and Neuro                                           757                                             780                                                    (3.0)%                               0.9%                (3.9)%                           -%                (3.9)%


        
          Interventional Cardiology                                            586                                             700                                                   (16.3)%                               0.5%               (16.8)%                           -%               (16.8)%


        
          Peripheral Interventions                                             416                                             358                                                     16.1%                               0.7%                 15.4%                        13.4%                   2.0%



        
       
                Cardiovascular                                           1,002                                           1,058                                                    (5.3)%                               0.6%                (5.9)%                         4.5%                (10.4)%



        
       
                Medical Devices5                                         2,584                                           2,684                                                    (3.7)%                               0.7%                (4.4)%                         1.5%                 (5.9)%



        
       
                Specialty Pharmaceuticals6                                  74                                              23                                                       n/a                                n/a                   n/a                          n/a                  11.0%



        
       
                Net Sales                                                        $
              
                2,659                                   $
              
                2,707                                     (1.8)%                  0.7%                       (2.5)%                   3.2%  (5.7)%





                        *In the third quarter of 2019, we presented Interventional Medicine and Specialty Pharmaceuticals together as "BTG Acquisition" and outside of our
                          operating and reportable segments net sales. Following the integration of BTG, we now include Interventional Medicine business within our Peripheral
                          Interventions operating segment, within the Cardiovascular reportable segment. We present Specialty Pharmaceuticals business as a standalone
                          operating segment alongside our reportable segments. We have revised amounts for the third quarter of 2019 to conform to the current year
                          presentation.


                                                                                                                                                              
           
     Change



                                                                                                      Three Months Ended                                 Reported                                  Less: Impact           Operational
                                                                                            September 30,                                        Basis                                  of Foreign                      Basis
                                                                                                                                                                                          Currency
                                                                                                                                                                                       Fluctuations




     
       (in millions)                                                     2020                            2019*





        
       U.S.                                                                                  $
              1,496                                   $
            1,561                                            (4.2)%                    -% (4.2)%


        
       EMEA                                                               540                                             535                                                0.8%                             3.7%                (2.9)%


        
       APAC                                                               472                                             485                                              (2.6)%                             1.5%                (4.1)%


        
       Latin America and Canada                                            77                                             102                                             (24.3)%                           (7.7)%               (16.6)%



        
       
                Medical Devices5                                    2,584                                           2,684                                              (3.7)%                             0.7%                (4.4)%



        
       
                Specialty Pharmaceuticals6                             74                                              23                                                 n/a                              n/a                   n/a



        
       
                Net Sales                                                   $
              
                2,659                         $
           
              2,707                                            (1.8)%                  0.7%  (2.5)%





        
       
                Emerging Markets4                                             $
              
                278                           $
           
              310                                           (10.3)%                (3.2)%  (7.1)%




                        *In the third quarter of 2019, we presented Interventional Medicine and Specialty Pharmaceuticals together as "BTG
                          Acquisition" and outside of our operating and reportable segments net sales. Following the integration of BTG, we
                          now include Interventional Medicine business within our Peripheral Interventions operating segment, within the
                          Cardiovascular reportable segment. We present Specialty Pharmaceuticals business as a standalone operating
                          segment alongside our reportable segments. We have revised amounts for the third quarter of 2019 to conform to
                          the current year presentation.










                         Amounts may not add due to rounding. Growth rates are based on actual, non-rounded amounts and may not
                          recalculate precisely.




                         Sales growth rates that exclude the impact of foreign currency fluctuations and/or the impact of recent
                          aforementioned acquisitions / divestitures are not prepared in accordance with U.S. GAAP.

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.

About Boston Scientific
Boston Scientific transforms lives through innovative medical solutions that improve the health of patients around the world. As a global medical technology leader for 40 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare. For more information, visit www.bostonscientific.com and connect on Twitter and Facebook.

Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like "anticipate," "expect," "project," "believe," "plan," "estimate," "intend" and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our business plans and product performance, and the impact of the COVID-19 outbreak on the company's results of operations. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. These factors, in some cases, have affected and in the future (together with other factors) could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this press release. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.

Factors that may cause such differences include, among other things: future economic, political, competitive, reimbursement and regulatory conditions; new product introductions; demographic trends; intellectual property; litigation; financial market conditions; and future business decisions made by us and our competitors. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item 1A - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this document.

Note: Amounts reported in millions within this press release are computed based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in dollars.

Use of Non-GAAP Financial Information
A reconciliation of the company's non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the company's use of these non-GAAP financial measures, is included in the exhibits attached to this press release.


     CONTACT:


     Media:   
     Kate Haranis                                      
     Investors: 
     Susie Lisa, CFA


              
     508-683-6585 (office)                                          
     508-683-5565 (office)


              
     Media Relations                                                
     Investor Relations


              
     Boston Scientific Corporation                                  
     Boston Scientific Corporation


                                            kate.haranis@bsci.com              
     
                
                  BSXInvestorRelations@bsci.com


                                                                                  
            
                BOSTON SCIENTIFIC CORPORATION

                                                                              
            CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS

                                                                                               
              (Unaudited)




                                                                                                    Three Months Ended                                      Nine Months Ended
                                                                                    
                September 30,                                    
          September 30,




       
                in millions, except per share data                        2020                             2019                     2020                   2019

    ---                                                                                                                                                       ---




       Net sales                                                                                 $
              2,659                                  $
          2,707                              $
       7,204       $
      7,831



       Cost of products sold                                                   869                                          777                                          2,465    2,265




       Gross profit                                                          1,790                                        1,930                                          4,740    5,566





       Operating expenses:



       Selling, general and administrative expenses                            984                                        1,012                                          2,760    2,849



       Research and development expenses                                       315                                          306                                            857      866



       Royalty expense                                                          12                                           15                                             32       48



       Amortization expense                                                    197                                          178                                            595      498



       Intangible asset impairment charges                                     219                                                                                        452      105



       Contingent consideration expense (benefit)                                6                                            8                                          (102)     (9)



       Restructuring charges (credits)                                           3                                            3                                             16       10



       Litigation-related net charges (credits)                                260                                           25                                            260    (108)



                                                                              1,995                                        1,547                                          4,870    4,258




       Operating income (loss)                                               (205)                                         383                                          (130)   1,308





       Other income (expense):



       Interest expense                                                       (86)                                        (95)                                         (265)   (294)



       Other, net                                                               64                                        (197)                                             9    (322)




       Income (loss) before income taxes                                     (227)                                          91                                          (386)     693



       Income tax expense (benefit)                                           (72)                                        (35)                                          (94)    (11)




       Net income (loss)                                                                         $
              (155)                                   $
          126                              $
       (292)        $
      704




       Preferred stock dividends                                              (14)                                                                                      (19)




       
                Net income (loss) available to common stockholders              $
              
                (169)                            $
        
            126                         $
      
         (311)   $
      
        704






       
                Net income (loss) per common share - basic                     $
              
                (0.12)                           $
        
            0.09                        $
      
         (0.22)  $
      
        0.51



       
                Net income (loss) per common share - assuming dilution         $
              
                (0.12)                           $
        
            0.09                        $
      
         (0.22)  $
      
        0.50





       
                
                  Weighted-average shares outstanding

    ---


       Basic                                                               1,430.9                                      1,393.1                                        1,413.0  1,390.6



       Assuming dilution                                                   1,430.9                                      1,412.2                                        1,413.0  1,409.7


                                                                                                                                                                                                                                                                                                                                           
              
                BOSTON SCIENTIFIC CORPORATION

                                                                                                                                                                                                                                                                                                                                  
              NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS

                                                                                                                                                                                                                                                                                                                                                          
              (Unaudited)




                                                                                                                                                                                                                                                                    
              
                Three Months Ended September 30, 2020




       
                (in millions, except per share data)                                                            Gross                           Operating                           Operating                           Other                           Income (Loss)                           Net Income                           Preferred                           Net Income                           Impact
                                                                                                         Profit                           Expenses                             Income                            Income                             Before                                  (Loss)                               Stock                              (Loss)                               per
                                                                                                                                                                             (Loss)                          (Expense)                          Income Taxes                                                                Dividends                          Available to                         Share (1)
                                                                                                                                                                                                                                                                                                                                                                  Common
                                                                                                                                                                                                                                                                                                                                                               Stockholders

    ---


       
                Reported                                                                                                   $
              
                1,790                                                                               $
              
                1,995                                                                                 $
              
                (205)                                                  $
      
        (22)   $
         
        (227)            $
        
          (155)          $
        
       (14)    $
        
       (169)    $
        
       (0.12)



       
                Non-GAAP adjustments:



       Amortization expense                                                                                             -                                                                   (197)                                                                     197                                                                                                                                             197                            176                          176                   0.12



       Intangible asset impairment charges                                                                              -                                                                   (219)                                                                     219                                                                                                                                             219                            189                          189                   0.13



       Acquisition / divestitures-related net charges (credits)                                                        30                                                                     (90)                                                                     120                                                                       (9)                                                                   111                             87                           87                   0.06



       Restructuring and restructuring-related net charges (credits)                                                   15                                                                      (8)                                                                      23                                                                                                                                              23                             21                           21                   0.01



       Litigation-related net charges (credits)                                                                         -                                                                   (260)                                                                     260                                                                                                                                             260                            255                          255                   0.18



       Investment impairment charges (credits)                                                                          -                                                                                                                                                                                                                     (65)                                                                  (65)                          (50)                        (50)                (0.03)



       EU MDR implementation costs                                                                                      6                                                                      (2)                                                                       8                                                                                                                                               8                              7                            7                   0.00



       Deferred tax expenses (benefits)                                                                                 -                                                                                                                                                                                                                                                                                                                           18                           18                   0.01



       Discrete tax items                                                                                               -                                                                                                                                                                                                                                                                                                                          (3)                         (3)                (0.00)




       
                Adjusted                                                                                                   $
              
                1,841                                                                               $
              
                1,220                                                                                   $
              
                621                                                   $
      
        (96)     $
        
         525              $
       
            543           $
       
        (14)    $
       
          530    $
       
           0.37





        (1) For the three months ended September 30, 2020, the effect of assuming the conversion of Mandatory Convertible Preferred Stock (MCPS) into shares of common stock was anti-dilutive, and therefore excluded from the calculation of EPS. Accordingly, GAAP net  loss and adjusted net income were reduced by cumulative Preferred stock dividends, as presented in our unaudited condensed consolidated statements of operations,
         for purposes of calculating EPS. We have assumed dilution of 13.6 million common stock equivalents related to employee stock options for all or a portion of the non-GAAP adjustments, which were anti-dilutive for GAAP purposes due to our net loss position.








                                                                                                                                                                                                                                                                    
              
                Three Months Ended September 30, 2019



       
                (in millions, except per share data)                                                            Gross                           Operating                           Operating                           Other                           Income (Loss)                           Net Income                           Preferred                           Net Income                           Impact
                                                                                                         Profit                           Expenses                             Income                            Income                             Before                                  (Loss)                               Stock                              (Loss)                               per
                                                                                                                                                                             (Loss)                          (Expense)                          Income Taxes                                                                Dividends                          Available to                         Share (1)
                                                                                                                                                                                                                                                                                                                                                                  Common
                                                                                                                                                                                                                                                                                                                                                               Stockholders

    ---


       
                Reported                                                                                                   $
              
                1,930                                                                               $
              
                1,547                                                                                   $
              
                383                                                  $
      
        (292)      $
        
         91              $
       
            126   
     
     $                     $
       
          126    $
       
           0.09



       
                Non-GAAP adjustments:



       Amortization expense                                                                                             -                                                                   (178)                                                                     178                                                                       (2)                                                                   176                            157                          157                   0.11



       Intangible asset impairment charges                                                                              -                                                                                                                                                                                                                                                                                                                                                                           0.00



       Acquisition-related net charges (credits)                                                                       28                                                                     (77)                                                                     105                                                                       199                                                                    304                            236                          236                   0.17



       Restructuring and restructuring-related net charges (credits)                                                    9                                                                      (6)                                                                      14                                                                                                                                              14                             12                           12                   0.01



       Litigation-related net charges (credits)                                                                         -                                                                    (25)                                                                      25                                                                                                                                              25                             19                           19                   0.01



       Investment impairment charges                                                                                    -                                                                                                                                                                                                                        1                                                                      1                              1                            1                   0.00



       EU MDR implementation costs                                                                                      2                                                                                                                                                2                                                                                                                                               2                              2                            2                   0.00



       Discrete tax items                                                                                               -                                                                                                                                                                                                                                                                                                                          (2)                         (2)                  0.00




       
                Adjusted                                                                                                   $
              
                1,969                                                                               $
              
                1,262                                                                                   $
              
                707                                                   $
      
        (94)     $
        
         613              $
       
            550   
     
     $                     $
       
          550    $
       
           0.39








       
                An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document.


                                                                                                                                                                                                                                                                                                                                           
              
                BOSTON SCIENTIFIC CORPORATION

                                                                                                                                                                                                                                                                                                                                  
              NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS

                                                                                                                                                                                                                                                                                                                                                           
              (Unaudited)




                                                                                                                                                                                                                                                                         
              
                Nine Months Ended September 30, 2020



       
                in millions, except per share data                                                              Gross                           Operating                           Operating                           Other                           Income (Loss)                           Net Income                           Preferred                           Net Income                           Impact
                                                                                                         Profit                           Expenses                             Income                            Income                             Before                                  (Loss)                               Stock                              (Loss)                               per
                                                                                                                                                                             (Loss)                          (Expense)                          Income Taxes                                                                Dividends                          Available to                         Share (1)
                                                                                                                                                                                                                                                                                                                                                                  Common
                                                                                                                                                                                                                                                                                                                                                               Stockholders

    ---


       
                Reported                                                                                                   $
              
                4,740                                                                               $
              
                4,870                                                                                 $
              
                (130)                                                 $
       
       (256)   $
        
        (386)            $
         
            (292)          $
        
       (19)    $
          
         (311)    $
        
       (0.22)



       
                Non-GAAP adjustments:



       Amortization expense                                                                                             -                                                                   (595)                                                                     595                                                                                                                                             595                            533                         533                      0.38



       Intangible asset impairment charges                                                                              -                                                                   (452)                                                                     452                                                                                                                                             452                            384                         384                      0.27



       Acquisition / divestitures-related net charges (credits)                                                        97                                                                     (52)                                                                     149                                                                       (1)                                                                   148                            100                         100                      0.07



       Restructuring and restructuring-related net charges (credits)                                                   47                                                                     (30)                                                                      77                                                                                                                                              77                             66                          66                      0.05



       Litigation-related net charges (credits)                                                                         -                                                                   (260)                                                                     260                                                                                                                                             260                            255                         255                      0.18



       Investment impairment charges (credits)                                                                          -                                                                                                                                                                                                                     (65)                                                                  (65)                          (50)                       (50)                   (0.04)



       EU MDR implementation costs                                                                                     14                                                                      (5)                                                                      20                                                                                                                                              20                             17                          17                      0.01



       Deferred tax expenses (benefits)                                                                                 -                                                                                                                                                                                                                                                                                                                           26                          26                      0.02



       Discrete tax items                                                                                               -                                                                                                                                                                                                                                                                                                                           20                          20                      0.01




       
                Adjusted                                                                                                   $
              
                4,898                                                                               $
              
                3,476                                                                                 $
              
                1,422                                                  $
       
       (322)   $
        
        1,100             $
         
            1,059           $
       
        (19)    $
         
          1,040    $
       
           0.73





        (1) For the nine months ended September 30, 2020, the effect of assuming the conversion of Mandatory Convertible Preferred Stock (MCPS) into shares of common stock was anti-dilutive, and therefore excluded from the calculation of EPS. Accordingly, GAAP net  loss and adjusted net income were reduced by cumulative Preferred stock dividends, as presented in our unaudited condensed consolidated statements of operations, for
         purposes of calculating EPS. We have assumed dilution of 14.1 million common stock equivalents related to employee stock options for all or a portion of the non-GAAP adjustments, which were anti-dilutive for GAAP purposes due to our net loss position.








                                                                                                                                                                                                                                                                         
              
                Nine Months Ended September 30, 2019



       
                in millions, except per share data                                                              Gross                           Operating                           Operating                           Other                           Income (Loss)                           Net Income                           Preferred                           Net Income                           Impact
                                                                                                         Profit                           Expenses                             Income                            Income                             Before                                  (Loss)                               Stock                              (Loss)                               per
                                                                                                                                                                             (Loss)                          (Expense)                          Income Taxes                                                                Dividends                          Available to                         Share (1)
                                                                                                                                                                                                                                                                                                                                                                  Common
                                                                                                                                                                                                                                                                                                                                                               Stockholders

    ---


       
                Reported                                                                                                   $
              
                5,566                                                                               $
              
                4,258                                                                                 $
              
                1,308                                                  $
       
       (615)     $
        
        693               $
         
            704   
     
     $                       $
         
          704    $
       
           0.50



       
                Non-GAAP adjustments:



       Amortization expense                                                                                             -                                                                   (498)                                                                     498                                                                                                                                             498                            444                         444                      0.31



       Intangible asset impairment charges                                                                              -                                                                   (105)                                                                     105                                                                                                                                             105                             97                          97                      0.07



       Acquisition / divestitures-related net charges (credits)                                                        60                                                                    (114)                                                                     174                                                                       331                                                                    505                            391                         391                      0.28



       Restructuring and restructuring-related net charges (credits)                                                   18                                                                     (20)                                                                      38                                                                                                                                              38                             31                          31                      0.02



       Litigation-related net charges (credits)                                                                         -                                                                     108                                                                    (108)                                                                                                                                          (108)                          (96)                       (96)                   (0.07)



       Investment impairment charges (credits)                                                                          -                                                                                                                                                                                                                        3                                                                      3                              3                           3                      0.00



       EU MDR implementation costs                                                                                      2                                                                                                                                                2                                                                                                                                               2                              2                           2                      0.00



       Discrete tax items                                                                                               -                                                                                                                                                                                                                                                                                                                           16                          16                      0.01




       
                Adjusted                                                                                                   $
              
                5,645                                                                               $
              
                3,629                                                                                 $
              
                2,016                                                  $
       
       (281)   $
        
        1,736             $
         
            1,590   
     
     $                     $
         
          1,590    $
       
           1.13








       
                An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document.

Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (loss), adjusted net income (loss) available to common stockholders and adjusted net income (loss) per share (EPS) that exclude certain amounts, operational net sales, which exclude the impact of foreign currency fluctuations and organic net sales, which exclude the impact of foreign currency fluctuations and the impact of recent aforementioned acquisitions and divestitures. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.

To calculate adjusted net income (loss), adjusted net income (loss) available to common stockholders and adjusted net income (loss) per share we exclude certain charges (credits) from GAAP net income and GAAP net income available to common stockholders. Amounts are presented after-tax at the company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate." Please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report filed on Form 10-K filed with the Securities and Exchange Commission or any Quarterly Report on Form 10-Q that we file thereafter for an explanation of each of these adjustments and the reasons for excluding each item.

The GAAP financial measures most directly comparable to adjusted net income (loss), adjusted net income (loss) available to common stockholders and adjusted net income (loss) per share are GAAP net income (loss), GAAP net income (loss) available to common stockholders and GAAP net income (loss) per common share - assuming dilution, respectively.

To calculate operational net sales growth rates, which exclude the impact of foreign currency fluctuations, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. To calculate organic net sales growth rates, we remove the impact of recent aforementioned acquisitions with no prior period related net sales from operational net sales. In addition, to calculate organic net sales growth rates, we remove from prior year, sales from product lines that we divested. The GAAP financial measure most directly comparable to operational net sales and organic net sales is net sales on a GAAP basis.

Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included in the accompanying schedules.

Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. The adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments' measures of net sales and profit or loss. These adjustments are excluded from the segment measures reported to our chief operating decision maker that are used to make operating decisions and assess performance.

We believe that presenting adjusted net income (loss) available to common stockholders, adjusted net income (loss) per share , operational net sales and organic net sales, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its operational decision-making and allows investors to see our results "through the eyes" of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.

View original content to download multimedia:http://www.prnewswire.com/news-releases/boston-scientific-announces-results-for-third-quarter-2020-301161250.html

SOURCE Boston Scientific Corporation