07.29.15
$7.4 Billion
KEY EXECUTIVES:
Michael F. Mahoney, President & CEO
Daniel J. Brennan, Exec. VP & Chief Financial Officer
Joseph M. Fitzgerald, Sr. VP & President, Rhythm Management
Maulik Nanavaty, Sr. VP & President, Neuromodulation
David A. Pierce, Sr. VP & President, Endoscopy
Michael P. Phalen, Exec. VP & President, MedSurg
Jeff Mirviss, Sr. VP & President, Peripheral Interventions
Kevin J. Ballinger, Sr. VP & President, Interventional Cardiology
Karen Prange, Sr. VP & President, Urology & Women’s Health
Jean Fitterer Lance, Sr. VP & Chief Compliance Officer
Edward Mackey, Exec. VP, Operations
NO. OF EMPLOYEES: 24,000
GLOBAL HEADQUARTERS: Marlborough, Mass.
Sometimes, hard work doesn’t pay off. Year after year of sweat and tears can sometimes yield nothing more than bitterness towards the parent (usually) who told you that “slow and steady wins the race.” But other times, one finds that parents actually do know what they’re talking about once in a while. Sometimes, hard work, plus smarts and a little bit of good fortune, really does bring success.
This has proven true for Boston Scientific Corp., which, after a handful of years of slow growth, layoffs (1,000 jobs in 2011 and another 1,000 positions in early 2013), and a “restructuring” at the end of fiscal year 2013, finally has seen a financial year that by any measure was a resounding success. Fiscal 2014 brought in consolidated revenue of $7.46 billion, which represented a 6 percent increase in operational revenue compared to 2013, and 3 percent revenue growth on a reported basis. This was above and beyond the company’s guidance for the year, which predicted growth of 2 to 5 percent on a reported basis and 3 to 5 percent on an operational basis. Six percent growth was a win. Adjusted earnings per share in 2014 were 84 cents in 2014, compared to 73 cents in 2013, representing a 15 percent increase year over year. The company reported a GAAP loss of 9 cents per share for both 2014 and 2013. It also expanded gross profit margin to 70.1 percent from 69.6 percent in 2013. In addition, Boston Scientific is investing in ongoing growth opportunities, and it invested $817 million, or approximately 11 percent of sales, into funding research and development.
“We believe the momentum we generated in 2014 will continue because our strategy is working,” said President and CEO Michael Mahoney. “We place patients first, have strong global businesses and a differentiated pipeline of meaningful innovation. We expect to continue to deliver strong shareholder value by growing revenue faster than the market, improving our operating margins and achieving double-digit adjusted EPS growth.”
Business Sector Activity
Boston Scientific divides its medical device offerings into seven business units: Electrophysiology, Endoscopy, Interventional Cardiology, Neuromodulation, Peripheral Interventions, Rhythm Management, Urology and Women’s Health. These units are further broken down into three reporting segments.
The Cardiovascular segment, consisting of the interventional cardiology and peripheral interventions businesses, grew operational revenue 5 percent in 2014 and improved adjusted operating margin year-over-year by more than 200 basis points. Interventional Cardiology delivered exceptional performance, driven by strong sales of drug-eluting stents and products from the company’s complex coronary interventional portfolio and emerging structural heart franchise. Peripheral Interventions added market-leading capabilities in thrombectomy and atherectomy with Boston Scientific’s acquisition of the Bayer AG interventional business in September 2014. The Bayer buy added Angiojet thrombectomy system and the Fetch 2 aspiration catheter, which are used in endovascular procedures to remove blood clots from blocked arteries and veins, to the company’s portfolio; as well as the Jetstream atherectomy system, used in fast-growing therapy to remove plaque and thrombi from diseased arteries. The deal was valued at $414 million in cash.
The Rhythm Management segment, made up of the Cardiac Rhythm Management and Electrophysiology businesses, grew operational revenue 6 percent in 2014, while adjusted operating margin improved more than 300 basis points year-over-year. Cardiac Rhythm Management increased global sales of its defibrillation and pacer products throughout the year, and accelerated demand for the subcutaneous implantable defibrillator (S-ICD) platform, which exceeded 2014 revenue expectations. According to Boston Scientific, the S-ICD system is the only implantable defibrillator that provides protection from sudden cardiac arrest while leaving the heart and vasculature untouched. This technology currently is being introduced in Asia and South America.
Additionally, the Electrophysiology business expanded its commercial impact with the launch of the Rhythmia mapping system, which enables physicians to diagnose heart arrhythmias and assess appropriate intervention. The system earned the CE mark in May 2013, and was cleared by the U.S. Food and Drug Administration the following August 2013. This contributed to the blockbuster 48 percent growth the EP business brought.
The MedSurg (medical-surgical) segment, comprised of the Endoscopy, Urology and Women’s Health and Neuromodulation businesses, grew operational revenue 5 percent in 2014, and adjusted operating margin improved more than 100 basis points year-over-year. Endoscopy posted operational sales growth of 5 percent in 2014, and Urology and Women’s Health delivered double-digit operational sales growth in the international markets. Neuromodulation delivered strong results with 5 percent operational sales growth and expanded the clinical application of its deep brain stimulation platform to assist in the treatment of Parkinson’s disease.
Big Buys
Urology promises to be a strong growth area for Boston Scientific in 2015. In March this year, the company announced a deal to acquire the urology portfolio of Endo International plc, which includes the Men’s Health and Prostate Health businesses of American Medical Systems. The strategic acquisition, which is expected to be completed in the second half of 2015 subject to customary closing conditions, will add technologies for treating benign prostatic hyperplasia, male stress urinary incontinence and erectile dysfunction, complementing the kidney stone, pelvic organ prolapse, female stress urinary incontinence and abnormal uterine bleeding treatment portfolios of Boston Scientific’s Urology and Women’s Health business.
Also expected to have a continued impact on the Urology and Women’s Health business is the company’s acquisition of IoGyn Inc. in May 2014. At the time, IoGyn was a pre-commercial stage company that had developed and received U.S. Food and Drug Administration (FDA) clearance for the Symphion system, a system for hysteroscopic intrauterine tissue removal including fibroids and polyps. This acquisition enabled the pairing of the Symphion system with Boston Scientific’s Genesys HTA system for abnormal uterine bleeding to create what the company called a “compelling” set of gynecologic surgery products. During 2014, Boston Scientific recognized gains of $19 million associated with the acquisition of IoGyn. Overall, the acquisition was valued at $510 million.
KEY EXECUTIVES:
Michael F. Mahoney, President & CEO
Daniel J. Brennan, Exec. VP & Chief Financial Officer
Joseph M. Fitzgerald, Sr. VP & President, Rhythm Management
Maulik Nanavaty, Sr. VP & President, Neuromodulation
David A. Pierce, Sr. VP & President, Endoscopy
Michael P. Phalen, Exec. VP & President, MedSurg
Jeff Mirviss, Sr. VP & President, Peripheral Interventions
Kevin J. Ballinger, Sr. VP & President, Interventional Cardiology
Karen Prange, Sr. VP & President, Urology & Women’s Health
Jean Fitterer Lance, Sr. VP & Chief Compliance Officer
Edward Mackey, Exec. VP, Operations
NO. OF EMPLOYEES: 24,000
GLOBAL HEADQUARTERS: Marlborough, Mass.
Sometimes, hard work doesn’t pay off. Year after year of sweat and tears can sometimes yield nothing more than bitterness towards the parent (usually) who told you that “slow and steady wins the race.” But other times, one finds that parents actually do know what they’re talking about once in a while. Sometimes, hard work, plus smarts and a little bit of good fortune, really does bring success.
This has proven true for Boston Scientific Corp., which, after a handful of years of slow growth, layoffs (1,000 jobs in 2011 and another 1,000 positions in early 2013), and a “restructuring” at the end of fiscal year 2013, finally has seen a financial year that by any measure was a resounding success. Fiscal 2014 brought in consolidated revenue of $7.46 billion, which represented a 6 percent increase in operational revenue compared to 2013, and 3 percent revenue growth on a reported basis. This was above and beyond the company’s guidance for the year, which predicted growth of 2 to 5 percent on a reported basis and 3 to 5 percent on an operational basis. Six percent growth was a win. Adjusted earnings per share in 2014 were 84 cents in 2014, compared to 73 cents in 2013, representing a 15 percent increase year over year. The company reported a GAAP loss of 9 cents per share for both 2014 and 2013. It also expanded gross profit margin to 70.1 percent from 69.6 percent in 2013. In addition, Boston Scientific is investing in ongoing growth opportunities, and it invested $817 million, or approximately 11 percent of sales, into funding research and development.
“We believe the momentum we generated in 2014 will continue because our strategy is working,” said President and CEO Michael Mahoney. “We place patients first, have strong global businesses and a differentiated pipeline of meaningful innovation. We expect to continue to deliver strong shareholder value by growing revenue faster than the market, improving our operating margins and achieving double-digit adjusted EPS growth.”
Business Sector Activity
Boston Scientific divides its medical device offerings into seven business units: Electrophysiology, Endoscopy, Interventional Cardiology, Neuromodulation, Peripheral Interventions, Rhythm Management, Urology and Women’s Health. These units are further broken down into three reporting segments.
The Cardiovascular segment, consisting of the interventional cardiology and peripheral interventions businesses, grew operational revenue 5 percent in 2014 and improved adjusted operating margin year-over-year by more than 200 basis points. Interventional Cardiology delivered exceptional performance, driven by strong sales of drug-eluting stents and products from the company’s complex coronary interventional portfolio and emerging structural heart franchise. Peripheral Interventions added market-leading capabilities in thrombectomy and atherectomy with Boston Scientific’s acquisition of the Bayer AG interventional business in September 2014. The Bayer buy added Angiojet thrombectomy system and the Fetch 2 aspiration catheter, which are used in endovascular procedures to remove blood clots from blocked arteries and veins, to the company’s portfolio; as well as the Jetstream atherectomy system, used in fast-growing therapy to remove plaque and thrombi from diseased arteries. The deal was valued at $414 million in cash.
The Rhythm Management segment, made up of the Cardiac Rhythm Management and Electrophysiology businesses, grew operational revenue 6 percent in 2014, while adjusted operating margin improved more than 300 basis points year-over-year. Cardiac Rhythm Management increased global sales of its defibrillation and pacer products throughout the year, and accelerated demand for the subcutaneous implantable defibrillator (S-ICD) platform, which exceeded 2014 revenue expectations. According to Boston Scientific, the S-ICD system is the only implantable defibrillator that provides protection from sudden cardiac arrest while leaving the heart and vasculature untouched. This technology currently is being introduced in Asia and South America.
Additionally, the Electrophysiology business expanded its commercial impact with the launch of the Rhythmia mapping system, which enables physicians to diagnose heart arrhythmias and assess appropriate intervention. The system earned the CE mark in May 2013, and was cleared by the U.S. Food and Drug Administration the following August 2013. This contributed to the blockbuster 48 percent growth the EP business brought.
The MedSurg (medical-surgical) segment, comprised of the Endoscopy, Urology and Women’s Health and Neuromodulation businesses, grew operational revenue 5 percent in 2014, and adjusted operating margin improved more than 100 basis points year-over-year. Endoscopy posted operational sales growth of 5 percent in 2014, and Urology and Women’s Health delivered double-digit operational sales growth in the international markets. Neuromodulation delivered strong results with 5 percent operational sales growth and expanded the clinical application of its deep brain stimulation platform to assist in the treatment of Parkinson’s disease.
Big Buys
Urology promises to be a strong growth area for Boston Scientific in 2015. In March this year, the company announced a deal to acquire the urology portfolio of Endo International plc, which includes the Men’s Health and Prostate Health businesses of American Medical Systems. The strategic acquisition, which is expected to be completed in the second half of 2015 subject to customary closing conditions, will add technologies for treating benign prostatic hyperplasia, male stress urinary incontinence and erectile dysfunction, complementing the kidney stone, pelvic organ prolapse, female stress urinary incontinence and abnormal uterine bleeding treatment portfolios of Boston Scientific’s Urology and Women’s Health business.
Also expected to have a continued impact on the Urology and Women’s Health business is the company’s acquisition of IoGyn Inc. in May 2014. At the time, IoGyn was a pre-commercial stage company that had developed and received U.S. Food and Drug Administration (FDA) clearance for the Symphion system, a system for hysteroscopic intrauterine tissue removal including fibroids and polyps. This acquisition enabled the pairing of the Symphion system with Boston Scientific’s Genesys HTA system for abnormal uterine bleeding to create what the company called a “compelling” set of gynecologic surgery products. During 2014, Boston Scientific recognized gains of $19 million associated with the acquisition of IoGyn. Overall, the acquisition was valued at $510 million.
Prolific as always, Boston Scientific had numerous product approvals and/or launches during fiscal year 2014. The United States saw its fair share of Boston Scientific product activity.
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