How Did Boston Scientific Fare In Q1, And What To Expect From Full Year 2019?

Boston Scientific (NYSE:BSX) recently reported its Q1 results, which were in line with our estimates. This note details the company’s Q1 performance, and Trefis’ forecasts for the full year 2019. You can view our interactive dashboard analysis ~ How Did Boston Scientific Fare In Q1, And What Can We Expect From Full Year 2019? for more details on the key drivers of the company’s expected performance.  In addition, you can see more of our data for Healthcare companies here.

How did Boston Scientific’s top line fare in Q1, and what’s the forecast for full year 2019?

• Total Revenues for Boston Scientific have largely trended higher over recent quarters.
• Revenues grew from $2.38 billion in Q1 2018 to $2.50 billion in Q1 2019.
• The growth can partly be attributed to impact of Augmenix and NxThera acquisitions in the Urology space.
• We estimate the revenues to be $10.64 billion for the full year 2019; a figure 8% higher than 2018.

What are Boston Scientific’s key sources of revenues?

• Boston Scientific generates its revenues primarily from three segments ~ MedSurg, Cardiovascular, and Rhythm & Neuro.
• MedSurg division comprises of medical devices designed and manufactured for Endoscopy, and Urology & Pelvic Health.
• Cardiovascular division comprises of products designed for interventional cardiology and peripheral inventions.
• Rhythm & Neuro segment primarily includes Cardiac Rhythm Management (Pacemakers and Defibrillators) products that are used to treat abnormal heart conditions, along with Neuromodulation.
• Neuromodulation products include stimulator systems used for spine and brain related conditions.

How did MedSurg segment fare in Q1 and how much can it grow in 2019?

• Boston Scientific’s MedSurg segment revenues grew from $711 million in Q1 2018 to $766 million in Q1 2019.
• This can primarily be attributed to higher sales of Urology & Pelvic Health related products.
• The company’s new acquisitions contributed 150 bps to the overall revenue growth.
• We forecast the revenues to grow in low double-digits for the full year 2019.
• This growth will likely be led by new acquisitions, and higher sales in endoscopy business, which is seeing strong demand for Resolution 360 Clips, SpyGlass DS Direct Visualization System, as well as Acquire Endoscopic Ultrasound Fine Needle Biopsy Device.

How much can Rhythm & Neuro segment revenues grow?

• Rhythm & Neuro revenues have grown from $736 million in Q1 2018 to $757 million in Q1 2019.
• Operational growth was 6% in Q1, negatively impacted by foreign exchange by 3%.
• The growth was primarily led by continued strong demand in the neuromodulation space.
• We forecast the revenues to grow in high single-digits for the full year 2019.
• The segment will likely benefit from continued growth in Neuromodulation and Electrophysiology, primarily led by Spectra WaveWriter Spinal Cord Stimulator (SCS) Systems, and Vercise deep brain stimulation platforms, which allows the combination of multiple treatment options in one single device.

What to expect from Cardiovascular segment?

• Cardiovascular revenues grew 4% from $933 million in Q1 2018 to $972 million in Q1 2019.
• This was primarily led by Eluvia DS launch in the U.S.
• We forecast the revenues to grow in mid-to-high-single-digits for the full year 2019.
• This growth will likely be led by higher Eluvia sales, as well as growth in interventional oncology and arterial.

What will be the impact of the above on Boston Scientific’s EPS?

• Boston Scientific’s Q1 earnings were $0.35 per share, in line with our estimates.
• The growth in earnings was driven by higher revenues, and 520 bps improvement in adjusted net income margin.
• We forecast the full year earnings to be $1.55 per share on an adjusted basis, reflecting mid-single-digit growth over 2018.
• The growth in earnings will likely be led by higher revenues, and around 100 bps improvement in margins.

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