BSX Boston Scientific 10-Q 2026-09-30 section summaries

Boston Scientific (BSX) — Q3 and first nine months of 2026

Consolidated results

Q3 sales growth of 1.4% contrasted with a 12.3% rise in cost of products sold (excluding amortization); gross margin declined to 66.7% from 69.9%. Nine-month sales increased 6.7%, while net income benefited from a lower income-tax provision ($132M versus $463M). Q3 SG&A fell to $1.683B from $1.741B and R&D rose to $520M from $514M. Litigation charges of $81M (none in Q3 2025), restructuring charges of $63M (versus an $8M credit), and a $39M intangible impairment weighed on quarterly operating profit; a $32M contingent-consideration credit partly offset them. Interest expense was $100M versus $87M in Q3 and $285M versus $259M for 9M.

Segments and business-line sales

Segment sales are presented on an internally derived constant-currency basis; consolidated sales include foreign-currency effects.

Segment operating income totaled $1.560B versus $1.718B in Q3 and $5.014B versus $5.007B for 9M. Q3 reconciliation to consolidated operating income: corporate expenses $(196)M versus $(299)M; impairment, acquisition/divestiture, restructuring, litigation and EU MDR costs $(302)M versus $(146)M; and amortization $(234)M versus $(225)M.

Q3 growth was strongest in Neuromodulation and Interventional Cardiology & Vascular Therapies, while Watchman and Electrophysiology declined. For 9M, sales were: Endoscopy $2.270B/$2.157B; Urology $1.991B/$1.992B; Watchman $1.496B/$1.423B; Electrophysiology $2.637B/$2.435B; and Interventional Oncology & Embolization $818M/$733M (2026/2025). Those year-to-date trends differ materially from Q3 for these lines.

Cash flow, balance sheet and shares

Other intangible assets include amortizable technology-related assets, patents and other intangibles; amortizable intangibles were $18.322B gross less $12.193B accumulated amortization/write-offs, and indefinite-lived IPR&D was $730M. Net goodwill had $9.900B of accumulated impairment charges. Using stockholders’ equity, goodwill and other intangible assets, tangible common equity was approximately $34M.

Issued shares less treasury shares imply approximately 1,483.0M shares outstanding at the start of 2026 and 1,449.5M at September 30. A $2.000B accelerated repurchase delivered approximately 40M shares; $3.000B remained under the $5.000B authorization. Weighted-average diluted shares were 1,452.0M versus 1,495.5M in Q3 and 1,473.9M versus 1,494.0M for 9M.

Capital allocation, transactions and risks

Cash used in investing was $2.984B for 9M, including $930M for acquisitions and $1.801B for investments and acquisitions of certain technologies; the comparable 2025 uses were $1.504B and $240M. The company repurchased $2.000B of stock (none in 9M 2025), and financing cash outflow was $1.239B versus $211M. Cash, cash equivalents and restricted cash ended the period at $797M, down from $2.147B at the start of the year.

Strategic investments rose to $2.292B from $681M. This included a $1.5B May payment to MiRus, in addition to $100M previously paid, for approximately 33.75% of its non-voting equity and an exclusive option to acquire its TAVR business. Exercising the option after milestones would require another $3.0B, with potential sales-based payments; the investment and option are subject to conditions that could reduce or eliminate the equity interest. BSX completed the Nalu Medical and Scivita Medical acquisitions for $523M and $213M net cash, respectively, and agreed to acquire TingSN for about $250M upfront plus up to $75M in milestones. Its proposed approximately $14.500B Penumbra acquisition remains subject to regulatory review, including an FTC Second Request, with closing expected in early 2027.

A 2026 restructuring plan is expected to cost $700M–$800M, including $600M–$700M of cash outlays, and target approximately $500M in annual pretax expense reductions; $102M had been incurred by September 30. Legal accruals rose to $370M from $242M. The company is substantially self-insured for product-liability and environmental claims and fully self-insured for IP infringement claims; additional litigation or regulatory outcomes could affect results, cash flow and covenant compliance.

Liquidity, tax and outlook

Long-term debt was $10.909B at September 30; fair value of debt obligations excluding finance leases was $11.225B. Commercial paper was $1.029B outstanding at a 4.11% weighted-average yield, with 19-day weighted-average maturity. The company had an undrawn $3.000B revolver and, for Penumbra financing, an undrawn $2.000B 364-day revolver and $6.000B delayed-draw term loan commitment. Actual leverage was 1.95x against a 3.75x limit; qualifying acquisitions can temporarily raise the covenant ceiling to 4.75x.

The 9M reported tax rate was 4.5% versus 17.2%, chiefly reflecting a $383M discrete benefit from a change in the anticipated future tax rate for recovering certain capitalized expenses; the continuing-operations rate was 17.4% versus 18.1%. Management expects to remain compliant with debt covenants over the next 12 months.

Boston Scientific (BSX) — Q3 and nine months ended September 30, 2026

Consolidated results

Q3 sales increased 1.5% (also 1.5% operational and organic, with no acquisition/divestiture impact). Nine-month sales grew 6.7%; foreign exchange reduced growth by 0.9 percentage points, leaving operational and organic growth of 5.8%. Q3 GAAP attributable earnings fell 22.9%, while adjusted earnings declined 5.5%. Nine-month GAAP earnings rose 27.1%, substantially faster than adjusted earnings, in part because reported tax expense included a $383 million discrete tax benefit.

Revenue by business

*Nine-month figures are included where the nine-month reported growth rate differed from Q3 by at least 3 percentage points.

Neuromodulation was the fastest-growing business in Q3, supported by pain products including Nalu and Intracept and the deep brain stimulation franchise. Cardiovascular growth benefited from the AGENT drug-coated balloon; Farapulse pulsed-field ablation also supported year-to-date growth. Endoscopy’s year-to-date growth was led by AXIOS. Urology faced weakness in its China stone franchise and commercial disruption in sacral neuromodulation.

A cybersecurity incident identified in August disrupted global IT systems, manufacturing, order processing and shipments. It reduced production and fulfillment, added idle-time and supply-chain costs, and materially weighed on Q3 results across businesses. Other pressures included increased Electrophysiology competition and slower LAAC market growth affecting WATCHMAN procedures, as well as China volume-based procurement effects in Endoscopy and Urology.

Margins and operating expenses

The cyber incident’s abnormal production variances reduced Q3 gross margin by 1.7 percentage points; higher supply-chain costs and investment in supply-chain and quality systems added pressure. Nine-month margin improved modestly, helped by lower inventory charges, recovery of prior tariffs and lower acquisition inventory step-up effects, partly offset by cyber costs and foreign-exchange pressure. SG&A benefited from disciplined spending in Q3, while R&D reflected continued pipeline investment.

Cash flow and investment

Lower operating cash flow mainly reflected higher working-capital payments, partly offset by higher sales and related operating income. Investing outflows included $930 million of net acquisition payments, primarily for Nalu Medical and Scivita Medical Technology, and $1.545 billion of net payments for investments and technology acquisitions, primarily the MiRus investment. Financing included $1.003 billion of net commercial-paper issuance, a $2.000 billion share-repurchase payment, and repayment of the remaining $255 million of 3.750% senior notes due March 2026. The company repurchased no shares in 9M 2025.

Capital, liquidity and strategic developments

At September 30, unrestricted cash was $609 million and commercial paper outstanding was $1.029 billion. The $3.000 billion revolving facility had no borrowings, with $1.971 billion available after commercial paper; it matures in 2031. The company also had undrawn acquisition-related facilities: a $2.000 billion 364-day revolver and a $6.000 billion delayed-draw term-loan facility. Leverage was 1.95x against a 3.75x covenant maximum; qualifying acquisitions over $1.000 billion can temporarily raise the limit to 4.75x. The company said it expects to meet its covenant and fund its needs for at least the next 12 months.

BSX agreed to acquire Penumbra for $374 per share, approximately $14.500 billion at announcement, with closing expected in early 2027 subject to regulatory clearance and other conditions. The companies received an FTC Second Request and are responding; Penumbra stockholders approved the deal. BSX expects to fund approximately $11.000 billion with cash and newly issued debt, with the remainder in BSX shares. Penumbra is expected to join Cardiovascular. Separately, a February 2026 accelerated share repurchase used $2.000 billion, delivering approximately 30 million shares initially and approximately 10 million more at final settlement; $3.000 billion remained authorized at September 30.

A global restructuring plan approved in July 2026 is expected to generate $500 million of annual gross pretax savings, with some savings reinvested in growth. Expected pretax charges are $700–$800 million, including $600–$700 million of future cash outlays; $102 million had been recorded by September 30. The prior 2023 plan was completed in Q2 2026, with $748 million of cumulative costs.

The nine-month reported tax rate was 4.5% versus 17.2%, largely reflecting the discrete tax benefit; the continuing-operations rate was 17.4% versus 18.1%. Management also cited tariff and trade-restriction uncertainty, geopolitical conflict, energy volatility, distribution costs and supply-chain disruption. On October 2, BSX agreed with Blackstone Life Sciences to co-fund development of its VITALYST circulatory-support system; BSX may receive up to $455 million through U.S. regulatory approval, while Blackstone may receive milestones of up to 2.5x its funded amount and royalties if the product is approved and commercialized.

Currency and interest-rate market risk

BSX uses non-speculative derivatives and, for currency risk, nonderivative hedges. It reports that gains and losses on derivatives substantially offset changes in the hedged exposures, and that changes in currency-derivative fair value are expected to have minimal impact on operations.

Currency exposures primarily arise from foreign-currency commitments, forecasted intercompany and third-party transactions, and net investments in subsidiaries. BSX manages counterparty risk by diversifying across major financial institutions and actively monitoring counterparties.

Interest-rate exposure mainly reflects U.S.-dollar- and euro-denominated borrowings, partly offset by U.S.-dollar cash investments. BSX had no interest-rate derivatives outstanding at either September 30, 2026 or December 31, 2025. At September 30, 2026, fixed-rate senior notes had an aggregate principal amount of $10.847B, approximately 91% of total debt on an amortized-cost basis.

Disclosure Controls and Internal Control

As of September 30, 2026, Boston Scientific’s CEO and CFO concluded that its disclosure controls and procedures were effective. No changes to internal control over financial reporting during Q3 2026 materially affected, or were reasonably likely to materially affect, those controls.

The company is continuing a multi-year, phased implementation of a new global ERP system to replace its existing system. Boston Scientific expects future implementation phases to materially affect internal controls. It plans to update controls as phases are completed and assess whether process changes require changes to control design or effectiveness testing.

Cybersecurity and operational disruption

An August 25, 2026 cybersecurity incident caused a global operational disruption that impaired manufacturing and the processing and shipment of customer orders, materially affecting BSX’s Q3 2026 results. The company has not quantified the incident’s financial impact. Operations were restored within weeks, but BSX may not recover all affected revenue and could face further financial, market-share, reputational, legal, or regulatory consequences. Civil claims have been filed, and additional regulatory scrutiny is possible. Response, remediation, and cybersecurity-strengthening efforts are expected to increase expenses.

During the disruption, BSX relied on manual alternatives to IT systems. These can be less efficient and increase the risk of errors, delays, and data-integrity issues, including in processes and controls supporting financial and operational reporting. Future cyber incidents, social engineering, or system changes could cause further disruption and costs.

Manufacturing and supply-chain concentration

BSX’s exposure to operational interruptions is heightened because many products are manufactured at one or a few locations, including third-party facilities. Cyberattacks, equipment failures, regulatory inspection outcomes, environmental events, or facility damage could interrupt production. Following a future disruption, BSX may be unable to restore operations, shift production, or meet demand quickly, potentially resulting in unrecoverable market-share losses and reputational harm.

On August 12, 2026, BSX Chairman and CEO Michael F. Mahoney adopted a Rule 10b5-1(c) trading plan covering the sale of 98,814 shares of BSX common stock to be acquired through stock-option exercises. Sales are subject to pre-established dates and price thresholds and may begin only after the applicable mandatory cooling-off period. The plan expires February 28, 2027, or earlier if all covered shares are sold. The filing describes a planned insider sale; it does not report completed sales or proceeds.