Boston Scientific Corporation (BSX) Earnings & Analysis

Latest quarter

Boston Scientific reported third-quarter revenue of $5.1 billion, above the consensus by 0.68%, although both figures round to $5.1 billion. Adjusted earnings per share of $0.73 matched the consensus. Revenue rose 1.44% from a year earlier, while diluted earnings per share fell to $0.40 from $0.51.

The company’s filing attributed sales growth primarily to interventional cardiology and vascular therapies, offset by cybersecurity-related disruption, electrophysiology competition and a slowdown in the market for WATCHMAN procedures. The filing said neuromodulation sales grew on demand for its pain and brain-stimulation products, while endoscopy and urology sales declined. Gross margin fell to 66.7% from 69.9%, and operating margin fell to 16.1% from 20.7%. The filing cited idle production time and supply-chain costs associated with the cyber incident among the factors affecting gross margin.

CEO Mike Mahoney said organic sales growth of 1.50% was below the company’s original 3.00% to 5.00% guidance. The filing said operating cash flow for the first nine months fell primarily because of higher working-capital payments.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CEO Mike Mahoney said operations were restored in September after the cybersecurity outage. In response to an analyst’s question, CFO Jon Monson estimated that the incident cost roughly $150.0 million in third-quarter sales, with lost sales, idle manufacturing capacity and direct costs affecting earnings. Monson said customer stocking after the outage would also weigh on fourth-quarter sales as those inventories are used.

Mahoney said electrophysiology market-share pressure intensified and was accelerated by the disruption. He expects further share erosion until the planned FARAWAVE Ultra launch in early 2028. For WATCHMAN, he attributed the market slowdown primarily to changes in patient identification and referrals as physicians assess clinical evidence. He said Boston Scientific had added commercial resources and held education events for referring and implanting clinicians.

Asked about the assumptions behind the 2027 outlook, Mahoney said the company was assuming no improvement in WATCHMAN market conditions and was factoring in a competing launch. He also cited pricing pressure in China and said the company expected the underlying fourth-quarter business dynamics to persist. Monson said product mix, China pricing and continued supply-chain and quality investment would pressure gross margin in 2027.

Analysts also asked about cost reductions and forecasting. Monson said the restructuring covers organizational changes, back-office processes, supply-chain optimization and other spending, while the company continues to fund its product portfolio. On forecasting, he said Boston Scientific had added scenario analysis, more objective models and additional outside data. Mahoney said some major product platforms had experienced delays and that the company was increasing its focus on launch reliability.

For the fourth quarter, Monson expects organic revenue to change by −3.00% to −1.00% and adjusted earnings per share of $0.77 to $0.79. Mahoney said the pending Penumbra acquisition is expected to close in early 2027, subject to remaining regulatory clearances.

Guidance

Boston Scientific lowered its full-year 2026 organic revenue growth outlook to approximately 3.75%. It also lowered its full-year adjusted earnings-per-share outlook to $3.16 to $3.18.