Boston Scientific Corporation BSX posted adjusted earnings per share (EPS) of 39 cents for the first quarter of 2022, which marked a 5.4% rise from the year-ago figure. The figure topped the Zacks Consensus Estimate by a penny and was within the adjusted earnings per share guidance range of 38-40 cents. The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring charges among others.
Reported EPS in the first quarter was 7 cents, a significant plunge from the year-ago quarter’s 23 cents per share.
Revenues of $3.03 billion in the first quarter improved 10% year over year on a reported basis and 12.6% on an operational basis (at constant exchange rate or CER). Revenues grew 9.7% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line exceeded the Zacks Consensus Estimate by 3.2%. The quarter’s top-line performance also exceeded the company’s projection of revenue growth of approximately 5-8% on both reported and organic basis.
Q1 Revenues in Detail
In the first quarter, revenues rose 12.8% in the United States on a reported basis (same operationally). Revenues were up 3.3% in the Europe, Middle East and Africa region (up 12%); 9.3% in the Asia Pacific zone (up 13.6%); 25.7% in Latin America and Canada (up 26.3%) and 22.8% in emerging markets (up 28.7%).
Segmental Analysis
In the first quarter, Boston Scientific has reorganized its operational structure and aggregated its core businesses, each of which generates revenues from the sale of Medical Devices, into two reportable segments, MedSurg and Cardiovascular. Within the Cardiovascular segment, the newly formed Cardiology division represents the combined former Rhythm Management and Interventional Cardiology businesses.
The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, Cardiology and Peripheral Interventions were $1.41 billion (up 11.1% year over year organically) and $465 million (up 10.1%), respectively, in the first quarter.
Boston Scientific Corporation Price, Consensus and EPS Surprise
Boston Scientific Corporation Price, Consensus and EPS Surprise
Boston Scientific Corporation price-consensus-eps-surprise-chart | Boston Scientific Corporation Quote
Within MedSurg, Endoscopy generated revenues of $531 million, up 8.8% organically. Urology and Pelvic Health revenues were $413 million, reflecting organic growth of 6.9%. Neuromodulation within MedSurg reported $209 million in revenues, reflecting 7.6% growth organically year over year.
Notably, on Mar 1, 2021, Boston Scientific had completed the sale of its Specialty Pharmaceuticals segment.
Margins
Gross margin in the first quarter expanded 93 basis points (bps) year over year to 68.4%. There was a 6.8% rise in the cost of products sold to $955 million.
Selling, general and administrative expenses rose 4% to $1.06 billion. Research and development expenses rose 15.6% to $319 million. Royalty expenses of $12 million remained unchanged year over year. Adjusted operating margin improved 245 bps to 22.5% in the reported quarter.
2022 Guidance
Boston Scientific updated full-year 2022 guidance and also provided guidance for the second quarter.
Full-year net sales growth is expected in the range of 7-9% (previously 6-8%) on a reported basis and 6.5-8.5% (previously 6-8%) on anorganic basis. The Zacks Consensus Estimate is currently pegged at $12.81 billion, indicating a 7.8% rise from the 2021 reported figure. Full-year adjusted EPS is expected in the range of $1.74 to $1.79 ($1.73 to $1.79). The Zacks Consensus Estimate of $1.76 indicates a 7.98% improvement from the 2021 annual figure.
For the second quarter of 2022, revenue growth is projected in the range of approximately 3-6% on a reported basis (same organically). Adjusted earnings are expected in the range of 41-43 cents per share. The current Zacks Consensus Estimate for second-quarter earnings and revenues is pegged at 44 cents and $3.26 billion, respectively.
Our Take
Boston Scientific ended the first quarter of 2022 on a bullish note with adjusted earnings and revenues surpassing the Zacks Consensus Estimate. The company registered a year-over-year improvement in organic sales, indicating a strong rebound in the legacy business from the pandemic mayhem.
Organic revenues at each of its core business segments and geographies were up in the reported quarter. The company also reported margin expansions on a year-over-year basis. The raised 2022 revenue guidance with strong organic growth expectations looks promising.
Zacks Rank and Stocks to Consider
Boston Scientific currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks from the broader Medical space include Meridian Bioscience, Inc. VIVO, Owens & Minor OMI and Vertex Pharmaceuticals Incorporated VRTX, each carrying a Zacks Rank #2 (Buy).
Meridian Bioscience has an earnings yield of 5.2% compared with the industry’s 0.9%. Meridian Bioscience’s earnings surpassed estimates in three of the trailing four quarters, with the average surprise being 9.3%.
Meridian Bioscience is set to report third-quarter fiscal 2022 earnings on May 6.
Owens & Minor has a long-term historical growth rate of 16.9%. Owens & Minor’s earnings surpassed estimates in the trailing four quarters, the average surprise being 29.51%.
Owens & Minor is set to report first-quarter 2022 earnings on May 3.
Vertex Pharmaceuticals has an estimated long-term growth rate of 11.5%. Vertex Pharmaceuticals’ earnings surpassed estimates in the trailing four quarters, the average surprise being 10%.
Vertex Pharmaceuticals is scheduled to report first-quarter 2022 earnings on May 5.
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