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Boston Scientific Reiterates Its R&D Expense Guidance for 2019

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R&D expense guidance

On its first-quarter earnings conference call, Boston Scientific (BSX) reiterated its 2019 R&D (research and development) expenses-to-sales percentage guidance of 10.5%–11%.

In the first quarter, the company reported adjusted R&D expenses of $271 million, 10.9% of the company’s total sales and close to the upper end of its first-quarter adjusted R&D-to-sales percentage guidance of 10.5%–11%. The withdrawal of surgical mesh products indicated for the transvaginal repair of pelvic organ prolapse in the United States based on an FDA notice led to increased mesh-related accruals, which in turn pushed Boston Scientific’s R&D expenses up in the first quarter.

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Wall Street projections

Analysts expect Boston Scientific’s R&D-to-sales percentage to rise four basis points YoY to 10.75% in 2019 and then to fall 37 basis points to 10.38% in 2020 and 15 basis points to 10.23% in 2021. Analysts expect the company’s R&D-to-sales percentage to rise 14 basis points YoY to 10.58% in the second quarter but to fall 21 basis points YoY to 10.70% in the third quarter and 23 basis points YoY to 10.63% in the fourth quarter of 2019.

Royalty and tax rate guidance

On its first-quarter earnings conference call, Boston Scientific guided for a royalty rate of lower than 1% for 2019. In the first quarter, the company reported royalty expenses worth 0.6% of sales, a flat performance YoY.

On its first-quarter earnings conference call, BSX revised its 2019 adjusted tax rate from 12% to 10%. It also guided for an adjusted tax rate of close to 11% in the second quarter.

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