How Have Transvaginal Mesh Lawsuits Impacted Boston Scientific’s Q2’16 Earnings?
Despite a strong revenue growth of Boston Scientific (NYSE:BSX) in Q2’16, a similar growth wasn’t reflected in the net income. This was primarily due to the large litigation related charge incurred by the company in Q2. Boston Scientific recognized a litigation related charge of around $618 million, which translates to around 41% of its reported gross profits in Q2.
In the table below we can see the key metrics reported by Boston Scientific in Q2’16 and how the net income would have been much higher, if the company didn’t have to incur the litigation related charge:
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Although the company hasn’t yet settled the dispute, it has been increasing its reserves over the last few quarters to settle the dispute at a later date. However, Boston Scientific estimates that its current mesh related reserves closely reflect the litigation charges that it might have to possibly incur to settle the dispute going forward. Hence, we can expect the litigation related charges to subside soon and a higher net income for the company.
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