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Analyzing Boston Scientific’s Financial Performance

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Boston Scientific’s top line

In Q1 2018, Boston Scientific (BSX) generated sales of $2.4 billion compared to $2.2 billion in Q1 2017. For fiscal 2018, fiscal 2019, and fiscal 2020, revenues are expected to be $9.8 billion, $10.5 billion, and $11.2 billion, respectively.

The company’s cost of goods sold increased from $650 million in Q1 2017 to $672 million in Q1 2018. Its gross profit increased from $1.5 million in Q1 2017 to $1.7 million in Q1 2018. The increase was due to the positive impact of cost reductions from Boston Scientific’s process improvement programs and restructuring programs.

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Operating expenses

Boston Scientific’s selling, general, and administrative expenses increased from $794 million in Q1 2017 to $860 million in Q1 2018. As a percentage of revenues, that was a reduction from 36.8% in Q1 2017 to 36.1% in Q1 2018, primarily due to the benefits of its targeted initiatives of end-to-end business process streamlining and automation, expansion of global shared services, and leveraging global sourcing.

Research and development expenses increased from $235 million in Q1 2017 to $261 million in Q1 2018. As a percentage of revenues, research and development expenses were nearly flat at 11% in Q1 2018 compared to 10.9% in Q1 2017. Royalty and amortization expenses in Q1 2018 were nearly flat at $18 million and $141 million, respectively, compared to $17 million and $143 million, respectively, in Q1 2017.

The company’s total operating expenses increased from $1.1 billion in Q1 2017 to $1.3 billion in Q1 2018. Its operating income increased from $364 million in Q1 2017 to $407 million in Q1 2018.

Bottom line

Boston Scientific’s interest expenses increased from $57 million in Q1 2017 to $61 million in Q1 2018. Its net income increased from $290 million in Q1 2017 to $298 million in Q1 2018. That translated to a net income per share of $0.21 in Q1 2018, which was the same as Q1 2017.

In the next part of this series, we’ll take a look at Boston Scientific’s cash flows.

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