How Does Boston Scientific Get To $12 Billion Sales In 2020: Rhythm & Neuro Or Cardiovascular?

We estimate Boston Scientific’s (NYSE: BSX) 2020 sales to be around $12 billion, driven by the company’s cardiovascular segment. Boston Scientific’s cardiovascular business will account for roughly 40% of the company’s total revenue in 2020, and it will also grow at a faster pace compared to the company’s other segments. Cardiovascular is expected to be the single-biggest revenue driver in 2020 with $4.6 billion in revenues, which is 1.3x the size of its MedSurg business, 1.4x the size of Rhythm & Neuro business, and 11x the size of its new Specialty Pharmaceuticals business. Cardiovascular will also be the fastest growing segment, adding $1.1 billion over 2017-2020 (39% of $2.9 billion in incremental revenues). MedSurg will likely add $0.9 billion (30% of the $2.9 billion in incremental revenue), Rhythm & Neuro will add $0.5 billion (17% of the incremental revenues), and Specialty Pharmaceuticals will add $0.4 billion or 14% of the total incremental revenue. In our interactive dashboard analysis on Boston Scientific’s Revenues, we discuss the company’s business model, revenues, segment sales, historical and forecast, along with comparison to peers, parts of which are highlighted in the below sections.

Boston Scientific Operates In 4 Business Segments

• 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 products, which include stimulator systems used for spine and brain related conditions.
• Specialty Pharmaceuticals segment primarily includes acute care antidotes to treat overexposure to certain medications and toxins. This business segment stemmed out of the BTG acquisition in 2019.

Boston Scientific’s Revenue Has Been On A Rise Over The Last Few Years

• Boston Scientific’s total revenue grew from $7.5 billion in 2015 to $10.7 billion in 2019.
• This growth was largely led by its MedSurg and Cardiovascular segments, which added around $1.3 billion each in sales during the same period.
• Looking forward, the revenues could grow at a CAGR of 9.2% to $14.0 billion in 2022, primarily led by Cardiovascular and MedSurg segments.

Comparing Boston Scientific’s Sales Growth To Its Peers

• Boston Scientific’s total revenue grew at a CAGR of 9.5% between 2015 and 2019.
• This compares with 12.4% growth for Abbott, 12.0% for Medtronic, and 17.1% for Intuitive Surgical over the same period.

Boston Scientific’s Cardiovascular Business Will Likely Grow In Low Double-Digits

• Boston Scientific’s cardiovascular segment sales grew from $2.9 billion in 2015 to $4.2 billion in 2019.
• We estimate it to grow to $5.5 billion in 2022, led by increased adoption of its Eluvia systems among physicians.
• Eluvia refers to Boston Scientific’s drugs eluting vascular stent system. It was approved by the U.S. FDA in 2018, and it has been gaining market share since launch. The future growth will also be aided by the company’s new products, including Ranger DCB, and BTG integration.

Boston Scientific’s Rhythm & Neuro Segment Could Grow In Mid-Single-Digits,Led By Neuromodulation & Electrophysiology

• Rhythm & Neuro segment sales grew from $2.5 billion in 2015 to $3.1 billion in 2019.
• Looking forward, we forecast the sales to grow in mid-single-digits to $3.7 billion in 2022.
• The sales growth will likely be led by continued growth in Neuromodulation and Electrophysiology.
• Boston Scientific’s products including Spectra WaveWriter Spinal Cord Stimulator (SCS) Systems, and Vercise deep brain stimulation platforms, which allows the combination of multiple treatment options in a single device, have seen increased adoption in the recent past, and this trend will likely continue in the near term.
• The company will launch its new implantable cardiac monitor – LUX-DX – in 2020, but its contribution will likely be seen only in 2021.

Boston Scientific’s MedSurg Segment Could Grow In High Single-Digits, Led By Endoscopy

• MedSurg segment sales grew from $2.0 billion in 2015 to $3.3 billion in 2019.
• Looking forward, we forecast the sales to grow in high single-digits to $4.3 billion in 2022.
• The sales growth will likely be led by continued growth in Endoscopy, which is seeing strong demand for Resolution 360 Clips, SpyGlass DS Direct Visualization System, as well as Acquire Endoscopic Ultrasound Fine Needle Biopsy Device.
• Another Boston Scientific product, SpaceOAR Hydrogel, is also seeing strong sales growth, as it has shown lower risk of side effects of prostate cancer, radiation therapy. SpaceOAR Hydrogel garnered sales of around $100 million in 2019.

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