NATICK, Mass., Jan. 29, 2013 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX) announces financial results for the fourth quarter and full year ended December 31, 2012, as well as sales and earnings per share (EPS) guidance for the first quarter and full year 2013. 

Fourth quarter results and recent developments:

• Reported sales of $1.821 billion, a year-over-year decline of 1 percent on a reported basis and on a constant currency basis excluding divested businesses. Delivered GAAP EPS of $0.04 and adjusted EPS of $0.18. Generated strong operating cash flow of $370 million.
  
  
• Achieved revenue growth of 14 percent and earned the clear number two share position in the U.S. in Neuromodulation, 10 percent in Endoscopy and 9 percent in Peripheral Interventions, all on a constant currency basis.
  
  
• The combined revenue in the countries of Brazil, Russia, India and China grew 35 percent in the quarter, on a constant currency basis.
  
  
• Continued to make progress on strengthening the CRM business with the U.S. launch of the S-ICD System, and the completion of the acquisition of Rhythmia Medical, Inc., a developer of a next-generation mapping and navigation solution for use in electrophysiology procedures.
  
  
• Increased DES revenue 6 percent internationally on a constant currency basis and maintained sequential share in the U.S., despite the year-over-year sales decline.
  
  
• Completed the acquisition of Vessix Vascular, Inc., a developer of a next generation catheter-based renal denervation system for the treatment of uncontrolled hypertension.
  
  
• Repurchased approximately 18 million shares under the 2011 share repurchase authorization.  Separately, the company announces the authorization of a new program to repurchase up to $1 billion of the company's common stock.
  
  
• Approved an expansion of the company's 2011 restructuring program, which is expected to reduce gross annual pre-tax operating expenses by an incremental $100 million to $115 million exiting 2013.

"We are pleased but not satisfied with our improved performance in the quarter," said Mike Mahoney, president and chief executive officer, Boston Scientific. "We continued to enhance our growth portfolio, expand in the emerging markets, and implement operational changes to improve our execution and sharpen our customer focus.  I am confident we are taking the critical steps that are needed to return our company to long-term growth."

Fourth Quarter 2012

Sales for the fourth quarter of 2012 were $1.821 billion, as compared to sales of $1.848 billion for the fourth quarter of 2011, a decrease of 1 percent.  Excluding the impact of foreign currency and sales from divested businesses, sales declined 1 percent as compared to the prior period.

Worldwide sales for the fourth quarter - on a constant currency and as reported basis - were as follows:

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

On a GAAP basis, net income for the fourth quarter of 2012 was $60 million, or $0.04 per share.  These results included divestiture-related net credits, acquisition, restructuring- and litigation-related charges, and amortization expense, of $192 million (after-tax) or $0.14 per share.  Adjusted net income for the fourth quarter of 2012, excluding these net charges, was $252 million, or $0.18 per share.

On a GAAP basis, net income for the fourth quarter of 2011 was $107 million, or $0.07 per share.  These results included acquisition- and divestiture-related net credits, litigation-, and restructuring-related charges, discrete tax items and amortization expense, of $90 million (after-tax) or $0.06 per share.  Adjusted net income for the fourth quarter of 2011, excluding these net charges, was $197 million, or $0.13 per share.

Full Year 2012

Sales for the full year 2012 were $7.249 billion, as compared to sales of $7.622 billion for the full year 2011, a decrease of 5 percent.  Excluding the impact of foreign currency and sales from divested businesses, sales decreased 3 percent as compared to the prior period.

Worldwide sales for the full year - on a constant currency and as reported basis - were as follows:

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

On a GAAP basis, net loss for the full year 2012 was $4.068 billion, or $2.89 per share.  Reported results included goodwill and other intangible asset impairment charges, acquisition- and divestiture-related net credits, restructuring- and litigation-related charges, discrete tax items and amortization expense (after-tax) of $5.001 billion, or $3.55 per share.  Adjusted net income for the full year 2012, excluding these net charges, was $933 million, or $0.66 per share.

On a GAAP basis, net income for the full year 2011 was $441 million, or $0.29 per share.  Reported results included goodwill and intangible asset impairment charges; acquisition- and divestiture-related net credits; litigation- and restructuring-related charges; discrete tax items and amortization expense (after-tax) of $577 million, or $0.38 per share.  Adjusted net income for the full year 2011, excluding these net charges, was $1.018 billion, or $0.67 per share.

Expansion of 2011 Restructuring Program

The company also announces an expansion of its 2011 restructuring program (the "Expansion") intended to build on the progress made under that program to strengthen our operational effectiveness and efficiencies and support new growth investments, which we expect will increase shareholder value.  The company estimates that the Expansion will reduce gross annual pre-tax operating expenses by approximately $100 million to $115 million exiting 2013; and that the total 2011 restructuring program, including the Expansion (the "Total Program"), will reduce gross annual pre-tax operating expenses by approximately $340 million to $375 million exiting 2013.  The company expects that a substantial portion of the Total Program savings will be reinvested in targeted areas for future growth, including strategic growth initiatives and emerging markets.  Key activities under the Total Program are expected to be substantially completed by the end of 2013. 

The company anticipates the reduction of 900 to 1,000 positions worldwide through a combination of employee attrition and targeted headcount reductions as a result of the Expansion.  Plans detailing specific employee impacts will be developed for each affected region and business, and the company will work with employee representative bodies where required under local laws.

The company estimates that the implementation of the Expansion will result in total pre-tax charges of approximately $140 million to $160 million, and that approximately $100 million to $120 million of these charges will result in future cash outlays.  The company estimates that the implementation of the Total Program will result in total pre-tax charges of approximately $300 million to $355 million, and that approximately $270 million to $300 million of these charges will result in future cash outlays.

Guidance for First Quarter and Full Year 2013

The company estimates sales for the first quarter of 2013 in a range of $1.740 to $1.815 billion.  The company estimates earnings on a GAAP basis in a range of $0.04 to $0.07 per share.  Adjusted earnings, excluding acquisition- and restructuring-related charges; and amortization expense, are estimated in a range of $0.14 to $0.17 per share. 

The company estimates sales for the full year 2013 in a range of $7.050 to $7.350 billion.  The company estimates earnings on a GAAP basis in a range of $0.29 to $0.37 per share.  Adjusted earnings, excluding divestiture-related net credits, acquisition- and restructuring-related charges; and amortization expense, are estimated in a range of $0.64 to $0.70 per share. 

Conference Call Information

Boston Scientific management will be discussing these results with analysts on a conference call today at 8:00 a.m. (ET).  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 more than 30 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 us at www.bostonscientific.com.

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 expected net sales, GAAP earnings and adjusted earnings for the first quarter and full year 2013; our financial performance; markets for our products and our market share; our business plans; our cost-savings and growth initiatives; our restructuring program activities and expected impact; and our positioning for revenue growth.  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 risks and uncertainties, in some cases, have affected and in the future 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.

Risks and uncertainties that may cause such differences include, among other things: future economic, political, competitive, reimbursement and regulatory conditions; new product introductions and the market acceptance of those products; markets for our products; expected pricing environment; expected procedural volumes; clinical trial results; demographic trends; intellectual property rights; litigation; financial market conditions; the execution and effect of our restructuring program; the execution and effect of our business strategy, including our cost-savings and growth initiatives; and future business decisions made by us and our competitors. New risks and uncertainties may arise from time to time and are difficult to predict. 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 IA - 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 statement 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 press release.

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 news release. 

CONTACT:   

Denise Kaigler
508-650-8330 (office)
Global Corporate Communications
Boston Scientific Corporation
media@bsci.com

Steven Campanini
508-652-5740 (office)
Media Relations
Boston Scientific Corporation
media@bsci.com

Michael Campbell
508-650-8023 (office)
Investor Relations
Boston Scientific Corporation
investor_relations@bsci.com

 

 

 

* Assumes dilution of 7.7 million shares for the year ended December 31, 2012 for all or a portion of these non-GAAP adjustments.

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

 

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

 

 

* We have restated prior year regional detail to conform to current year presentation.

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

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

 

 

* We have restated prior year regional detail to conform to current year presentation.

Growth rates are based on actual, non-rounded amounts and may not recalculate precisely.

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

 

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

 

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

 

* The estimated impact of foreign currency exchange related to international Drug-eluting stent systems is approximately $5 million or 3%.

 

* BRIC - Countries comprised of Brazil, Russia, India and China ("BRIC")

 

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

Use of Non-GAAP Financial Measures

To supplement Boston Scientific's consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP financial measures, including adjusted net income and adjusted net income per share that exclude certain amounts and regional and divisional revenue growth rates that exclude the impact of changes in foreign currency exchange rates. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States.

The GAAP financial measure most directly comparable to adjusted net income is GAAP net income and the GAAP financial measure most directly comparable to adjusted net income per share is GAAP net income per share. To calculate regional and divisional revenue growth rates that exclude the impact of changes in foreign currency exchange rates, the Company converts actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The GAAP financial measure most directly comparable to this non-GAAP financial measure is growth rate percentages using 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 the Company's business, to assess its performance relative to its 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 the Company's operating segments. The adjustments excluded from the Company's non-GAAP financial measures are consistent with those excluded from its operating segments' measures of profit or loss. These adjustments are excluded from the segment measures that are reported to the Company's chief operating decision maker that are used to make operating decisions and assess performance.

The Company believes that presenting adjusted net income, adjusted net income per share and regional and divisional revenue growth rates that exclude the impact of changes in foreign currency exchange rates, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by Boston Scientific management for its financial and operational decision-making and allows investors to see Boston Scientific's results "through the eyes" of management. The Company further believes that providing this information assists Boston Scientific's investors in understanding the Company's operating performance and the methodology used by management to evaluate and measure such performance.

The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three months and full year ended December 31, 2012 and 2011 and for the forecasted three month period ending March 31, 2013 and full year ending December 31, 2013, as well as reasons for excluding each of these individual items:

Adjusted Net Income and Adjusted Net Income per Share:

 

 

 

 

 

 

 

Regional and Divisional Revenue Growth Rates Excluding the Impact of Changes in Foreign Currency Exchange Rates

 

Adjusted net income, adjusted net income per share and regional and divisional revenue growth rates that exclude the impact of changes in foreign currency exchange rates 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 Boston Scientific does, which may limit the usefulness of those measures for comparative purposes.

 

 

 

SOURCE Boston Scientific Corporation