000088572512/31Q3false202320232023202300008857252023-01-012023-09-300000885725us-gaap:CommonStockMember2023-01-012023-09-300000885725bsx:SeniorNotedue2027Member2023-01-012023-09-30iso4217:USDxbrli:shares00008857252023-10-31xbrli:shares00008857252023-07-012023-09-30iso4217:USD00008857252022-07-012022-09-3000008857252022-01-012022-09-3000008857252023-09-3000008857252022-12-310000885725us-gaap:PreferredStockMember2023-06-300000885725us-gaap:PreferredStockMember2022-06-300000885725us-gaap:PreferredStockMember2022-12-310000885725us-gaap:PreferredStockMember2021-12-310000885725us-gaap:PreferredStockMember2023-07-012023-09-300000885725us-gaap:PreferredStockMember2022-07-012022-09-300000885725us-gaap:PreferredStockMember2023-01-012023-09-300000885725us-gaap:PreferredStockMember2022-01-012022-09-300000885725us-gaap:PreferredStockMember2023-09-300000885725us-gaap:PreferredStockMember2022-09-3000008857252023-06-3000008857252022-06-3000008857252021-12-310000885725us-gaap:CommonStockMember2023-07-012023-09-300000885725us-gaap:CommonStockMember2022-07-012022-09-300000885725us-gaap:CommonStockMember2023-01-012023-09-300000885725us-gaap:CommonStockMember2022-01-012022-09-3000008857252022-09-300000885725us-gaap:CommonStockMember2023-06-300000885725us-gaap:CommonStockMember2022-06-300000885725us-gaap:CommonStockMember2022-12-310000885725us-gaap:CommonStockMember2021-12-310000885725us-gaap:CommonStockMember2023-09-300000885725us-gaap:CommonStockMember2022-09-300000885725us-gaap:TreasuryStockCommonMember2023-06-300000885725us-gaap:TreasuryStockCommonMember2022-06-300000885725us-gaap:TreasuryStockCommonMember2022-12-310000885725us-gaap:TreasuryStockCommonMember2021-12-310000885725us-gaap:TreasuryStockCommonMember2023-07-012023-09-300000885725us-gaap:TreasuryStockCommonMember2022-07-012022-09-300000885725us-gaap:TreasuryStockCommonMember2023-01-012023-09-300000885725us-gaap:TreasuryStockCommonMember2022-01-012022-09-300000885725us-gaap:TreasuryStockCommonMember2023-09-300000885725us-gaap:TreasuryStockCommonMember2022-09-300000885725us-gaap:AdditionalPaidInCapitalMember2023-06-300000885725us-gaap:AdditionalPaidInCapitalMember2022-06-300000885725us-gaap:AdditionalPaidInCapitalMember2022-12-310000885725us-gaap:AdditionalPaidInCapitalMember2021-12-310000885725us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300000885725us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300000885725us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300000885725us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300000885725us-gaap:AdditionalPaidInCapitalMember2023-09-300000885725us-gaap:AdditionalPaidInCapitalMember2022-09-300000885725us-gaap:RetainedEarningsMember2023-06-300000885725us-gaap:RetainedEarningsMember2022-06-300000885725us-gaap:RetainedEarningsMember2022-12-310000885725us-gaap:RetainedEarningsMember2021-12-310000885725us-gaap:RetainedEarningsMember2023-07-012023-09-300000885725us-gaap:RetainedEarningsMember2022-07-012022-09-300000885725us-gaap:RetainedEarningsMember2023-01-012023-09-300000885725us-gaap:RetainedEarningsMember2022-01-012022-09-300000885725us-gaap:RetainedEarningsMember2023-09-300000885725us-gaap:RetainedEarningsMember2022-09-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-06-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-310000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-012023-09-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-09-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-012022-09-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-09-300000885725us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-300000885725us-gaap:NoncontrollingInterestMember2023-06-300000885725us-gaap:NoncontrollingInterestMember2022-06-300000885725us-gaap:NoncontrollingInterestMember2022-12-310000885725us-gaap:NoncontrollingInterestMember2021-12-310000885725us-gaap:NoncontrollingInterestMember2023-07-012023-09-300000885725us-gaap:NoncontrollingInterestMember2022-07-012022-09-300000885725us-gaap:NoncontrollingInterestMember2023-01-012023-09-300000885725us-gaap:NoncontrollingInterestMember2022-01-012022-09-300000885725us-gaap:NoncontrollingInterestMember2023-09-300000885725us-gaap:NoncontrollingInterestMember2022-09-300000885725bsx:RelievantMedsystemsIncMember2023-09-19xbrli:pure0000885725bsx:RelievantMedsystemsIncMember2023-09-192023-09-190000885725bsx:ApolloMember2023-04-040000885725bsx:ApolloMember2023-04-042023-04-040000885725bsx:AcotecMember2023-02-200000885725bsx:AcotecMember2023-02-202023-02-20iso4217:HKD0000885725bsx:AcotecMember2023-01-012023-09-300000885725bsx:ApolloMember2023-01-012023-09-300000885725bsx:AcotecMember2023-09-300000885725bsx:ApolloMember2023-09-300000885725bsx:AcotecMember2023-02-200000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:AcotecMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:AcotecMember2023-01-012023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:AcotecMembersrt:WeightedAverageMember2023-09-300000885725us-gaap:CustomerRelationshipsMemberbsx:AcotecMember2023-09-300000885725us-gaap:CustomerRelationshipsMemberbsx:AcotecMember2023-01-012023-09-300000885725us-gaap:CustomerRelationshipsMemberbsx:AcotecMembersrt:WeightedAverageMember2023-09-300000885725bsx:AcotecMemberus-gaap:OtherIntangibleAssetsMember2023-09-300000885725bsx:AcotecMemberus-gaap:OtherIntangibleAssetsMember2023-01-012023-09-300000885725bsx:AcotecMembersrt:WeightedAverageMemberus-gaap:OtherIntangibleAssetsMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:ApolloMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:ApolloMember2023-01-012023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMemberbsx:ApolloMember2023-09-300000885725us-gaap:CustomerRelationshipsMemberbsx:ApolloMember2023-09-300000885725us-gaap:CustomerRelationshipsMemberbsx:ApolloMember2023-01-012023-09-300000885725us-gaap:CustomerRelationshipsMembersrt:WeightedAverageMemberbsx:ApolloMember2023-09-300000885725bsx:BaylisMedicalMember2022-02-142022-02-140000885725bsx:BaylisMedicalMember2023-01-012023-09-300000885725bsx:BaylisMedicalMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:BaylisMedicalMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMemberbsx:BaylisMedicalMember2023-01-012023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMembersrt:WeightedAverageMemberbsx:BaylisMedicalMember2023-09-300000885725us-gaap:OtherIntangibleAssetsMemberbsx:BaylisMedicalMember2023-09-300000885725us-gaap:OtherIntangibleAssetsMemberbsx:BaylisMedicalMember2023-01-012023-09-300000885725srt:WeightedAverageMemberus-gaap:OtherIntangibleAssetsMemberbsx:BaylisMedicalMember2023-09-300000885725bsx:AllBusinessAcquisitionsMember2023-09-300000885725bsx:RDRegulatoryandCommercializationbasedMilestoneMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725bsx:RDRegulatoryandCommercializationbasedMilestoneMembersrt:MinimumMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725bsx:RDRegulatoryandCommercializationbasedMilestoneMembersrt:MaximumMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725bsx:RDRegulatoryandCommercializationbasedMilestoneMembersrt:WeightedAverageMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725bsx:RevenueBasedPaymentsMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725srt:MinimumMemberbsx:RevenueBasedPaymentsMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-30utr:Rate0000885725srt:MaximumMemberbsx:RevenueBasedPaymentsMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725srt:WeightedAverageMemberbsx:RevenueBasedPaymentsMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-310000885725us-gaap:PatentsMember2023-09-300000885725us-gaap:PatentsMember2022-12-310000885725us-gaap:OtherIntangibleAssetsMember2023-09-300000885725us-gaap:OtherIntangibleAssetsMember2022-12-310000885725us-gaap:GoodwillMember2023-09-300000885725us-gaap:GoodwillMember2022-12-310000885725us-gaap:InProcessResearchAndDevelopmentMember2023-09-300000885725us-gaap:InProcessResearchAndDevelopmentMember2022-12-310000885725us-gaap:TechnologyBasedIntangibleAssetsMember2023-09-300000885725us-gaap:TechnologyBasedIntangibleAssetsMember2022-12-310000885725bsx:MedsurgMember2022-12-310000885725bsx:CardiovascularMember2022-12-310000885725bsx:MedsurgMember2023-01-012023-09-300000885725bsx:CardiovascularMember2023-01-012023-09-300000885725bsx:MedsurgMember2023-09-300000885725bsx:CardiovascularMember2023-09-300000885725bsx:December2027NotesMember2023-09-30iso4217:EUR0000885725us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2023-01-012023-09-300000885725us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2023-09-30bsx:derivative_instrument0000885725us-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:ForeignExchangeContractMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:NetInvestmentHedgingMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:NetInvestmentHedgingMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberbsx:ForeigncurrencydenominatedindebtMemberus-gaap:NetInvestmentHedgingMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberbsx:ForeigncurrencydenominatedindebtMemberus-gaap:NetInvestmentHedgingMember2022-12-310000885725us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-09-300000885725us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2023-09-30bsx:units0000885725us-gaap:NondesignatedMemberus-gaap:ForeignExchangeForwardMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2023-07-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2023-07-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberbsx:ForeigncurrencydenominatedindebtMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2023-07-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateContractMemberus-gaap:InterestExpenseMember2023-07-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2022-07-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2022-07-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberbsx:ForeigncurrencydenominatedindebtMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2022-07-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateContractMemberus-gaap:InterestExpenseMember2022-07-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2023-01-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2023-01-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberbsx:ForeigncurrencydenominatedindebtMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2023-01-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateContractMemberus-gaap:InterestExpenseMember2023-01-012023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2022-01-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2022-01-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberbsx:ForeigncurrencydenominatedindebtMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2022-01-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:CashFlowHedgingMemberus-gaap:InterestRateContractMemberus-gaap:InterestExpenseMember2022-01-012022-09-300000885725us-gaap:AccumulatedTranslationAdjustmentMember2023-01-012023-09-300000885725us-gaap:AccumulatedTranslationAdjustmentMember2023-07-012023-09-300000885725us-gaap:AccumulatedTranslationAdjustmentMember2022-07-012022-09-300000885725us-gaap:AccumulatedTranslationAdjustmentMember2022-01-012022-09-300000885725us-gaap:CashFlowHedgingMemberus-gaap:CostOfSalesMemberus-gaap:ForeignExchangeContractMember2023-09-300000885725us-gaap:ForeignExchangeContractMemberus-gaap:InterestExpenseMemberus-gaap:NetInvestmentHedgingMember2023-09-300000885725us-gaap:CashFlowHedgingMemberus-gaap:InterestRateContractMemberus-gaap:InterestExpenseMember2023-09-300000885725us-gaap:NondesignatedMemberus-gaap:OtherNonoperatingIncomeExpenseMember2023-07-012023-09-300000885725us-gaap:NondesignatedMemberus-gaap:OtherNonoperatingIncomeExpenseMember2022-07-012022-09-300000885725us-gaap:NondesignatedMemberus-gaap:OtherNonoperatingIncomeExpenseMember2023-01-012023-09-300000885725us-gaap:NondesignatedMemberus-gaap:OtherNonoperatingIncomeExpenseMember2022-01-012022-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:ForeignExchangeContractMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentAssetsMemberus-gaap:ForeignExchangeContractMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMember2022-12-310000885725us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2023-09-300000885725us-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMemberus-gaap:PrepaidExpensesAndOtherCurrentAssetsMember2022-12-310000885725us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2023-09-300000885725us-gaap:OtherCurrentLiabilitiesMemberus-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:ForeignExchangeContractMemberus-gaap:OtherNoncurrentLiabilitiesMember2022-12-310000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentLiabilitiesMember2023-09-300000885725us-gaap:DesignatedAsHedgingInstrumentMemberus-gaap:OtherNoncurrentLiabilitiesMember2022-12-310000885725us-gaap:OtherCurrentLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2023-09-300000885725us-gaap:OtherCurrentLiabilitiesMemberus-gaap:NondesignatedMemberus-gaap:ForeignExchangeContractMember2022-12-310000885725us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000885725us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-09-300000885725us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2023-09-300000885725us-gaap:FairValueMeasurementsRecurringMember2023-09-300000885725us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000885725us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310000885725us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-12-310000885725us-gaap:FairValueMeasurementsRecurringMember2022-12-310000885725us-gaap:FairValueInputsLevel3Member2023-09-300000885725bsx:LicensingarrangementassetsMember2023-09-300000885725bsx:LicensingarrangementassetsMembersrt:WeightedAverageMember2023-09-300000885725bsx:LicensingarrangementliabilitiesMembersrt:MinimumMember2023-09-300000885725srt:MaximumMemberbsx:LicensingarrangementliabilitiesMember2023-09-300000885725bsx:LicensingarrangementliabilitiesMembersrt:WeightedAverageMember2023-09-300000885725bsx:LicensingarrangementassetsMember2023-01-012023-09-300000885725bsx:LicensingarrangementliabilitiesMember2023-01-012023-09-300000885725bsx:March2024NotesMember2023-09-300000885725bsx:March2024NotesMember2022-12-310000885725bsx:March2025NotesMember2023-09-300000885725bsx:March2025NotesMember2022-12-310000885725bsx:June2025NotesMember2023-09-300000885725bsx:June2025NotesMember2022-12-310000885725bsx:March2026NotesMember2023-09-300000885725bsx:March2026NotesMember2022-12-310000885725bsx:December2027NotesMember2022-12-310000885725bsx:March2028SeniorNotesMember2023-09-300000885725bsx:March2028SeniorNotesMember2022-12-310000885725bsx:March2028NotesMember2023-09-300000885725bsx:March2028NotesMember2022-12-310000885725bsx:March2029NotesMember2023-09-300000885725bsx:March2029NotesMember2022-12-310000885725bsx:June2030NotesMember2023-09-300000885725bsx:June2030NotesMember2022-12-310000885725bsx:March2031NotesMember2023-09-300000885725bsx:March2031NotesMember2022-12-310000885725bsx:March2034NotesMember2023-09-300000885725bsx:March2034NotesMember2022-12-310000885725bsx:November2035NotesMember2023-09-300000885725bsx:November2035NotesMember2022-12-310000885725bsx:March2039NotesMember2023-09-300000885725bsx:March2039NotesMember2022-12-310000885725bsx:January2040NotesMember2023-09-300000885725bsx:January2040NotesMember2022-12-310000885725bsx:March2049NotesMember2023-09-300000885725bsx:March2049NotesMember2022-12-310000885725us-gaap:SeniorNotesMember2023-09-300000885725us-gaap:SeniorNotesMember2022-12-310000885725us-gaap:CapitalLeaseObligationsMember2023-09-300000885725us-gaap:CapitalLeaseObligationsMember2022-12-310000885725us-gaap:RevolvingCreditFacilityMember2021-05-100000885725us-gaap:RevolvingCreditFacilityMember2021-05-102021-05-100000885725us-gaap:RevolvingCreditFacilityMember2022-12-310000885725us-gaap:RevolvingCreditFacilityMember2023-09-300000885725bsx:CurrentRequirementMember2023-09-300000885725bsx:ActualCovenantMember2023-09-300000885725bsx:RequirementAsOfDecember312021AndThroughRemainingTermOfFacilityMember2023-09-300000885725bsx:RequirementFourSucceedingQuartersFollowingQualifiedAcquisitionMember2023-09-300000885725bsx:RequirementfifthquarterfollowingqualifiedacquisitionMember2023-09-300000885725bsx:RequirementSixthQuarterFollowingQualifiedAcquisitionMember2023-09-300000885725bsx:RequirementSeventhQuarterFollowingQualifiedAcquisitionMember2023-09-300000885725bsx:RequirementEighthQuarterFollowingQualifiedAcquisitionAndThroughRemainingTermOfFacilityMember2023-09-300000885725us-gaap:CommercialPaperMember2023-01-012023-09-300000885725bsx:TheOfferingAggregatePrincipalAmountMember2023-09-300000885725bsx:TheOfferingEarlyRedemptionOfCombinedAggregatePrincipalSNMember2022-03-310000885725bsx:EuroDenominatedFactoringArrangementsMember2023-09-300000885725bsx:EuroDenominatedFactoringArrangementsMember2023-01-012023-09-300000885725bsx:EuroDenominatedFactoringArrangementsMember2022-12-310000885725bsx:EuroDenominatedFactoringArrangementsMember2022-01-012022-12-310000885725bsx:YenDenominatedFactoringArrangementsMember2023-09-300000885725bsx:YenDenominatedFactoringArrangementsMember2023-01-012023-09-300000885725bsx:YenDenominatedFactoringArrangementsMember2022-12-310000885725bsx:YenDenominatedFactoringArrangementsMember2022-01-012022-12-310000885725bsx:RenminbiDenominatedFactoringArrangementsMember2023-09-300000885725bsx:RenminbiDenominatedFactoringArrangementsMember2023-01-012023-09-300000885725bsx:RenminbiDenominatedFactoringArrangementsMember2022-12-310000885725bsx:RenminbiDenominatedFactoringArrangementsMember2022-01-012022-12-3100008857252023-01-312023-01-310000885725bsx:A550MCPSSeriesAMember2020-05-270000885725bsx:A550MCPSSeriesAMember2020-05-272020-05-270000885725bsx:A550MCPSSeriesAMember2023-09-300000885725us-gaap:EmployeeStockOptionMember2023-07-012023-09-300000885725us-gaap:EmployeeStockOptionMember2022-07-012022-09-300000885725us-gaap:EmployeeStockOptionMember2023-01-012023-09-300000885725us-gaap:EmployeeStockOptionMember2022-01-012022-09-300000885725bsx:A550MCPSSeriesAMember2023-07-012023-09-300000885725bsx:A550MCPSSeriesAMember2022-07-012022-09-300000885725bsx:A550MCPSSeriesAMember2023-01-012023-09-300000885725bsx:A550MCPSSeriesAMember2022-01-012022-09-3000008857252020-12-14bsx:reportablesegments0000885725bsx:MedsurgMember2023-07-012023-09-300000885725bsx:MedsurgMember2022-07-012022-09-300000885725bsx:MedsurgMember2022-01-012022-09-300000885725bsx:CardiovascularMember2023-07-012023-09-300000885725bsx:CardiovascularMember2022-07-012022-09-300000885725bsx:CardiovascularMember2022-01-012022-09-300000885725bsx:BSXReportableSegmentsMember2023-07-012023-09-300000885725bsx:BSXReportableSegmentsMember2022-07-012022-09-300000885725bsx:BSXReportableSegmentsMember2023-01-012023-09-300000885725bsx:BSXReportableSegmentsMember2022-01-012022-09-300000885725bsx:TotalAllocatedToReportableSegmentsMember2023-07-012023-09-300000885725bsx:TotalAllocatedToReportableSegmentsMember2022-07-012022-09-300000885725bsx:TotalAllocatedToReportableSegmentsMember2023-01-012023-09-300000885725bsx:TotalAllocatedToReportableSegmentsMember2022-01-012022-09-300000885725bsx:CorporateExpensesincludinghedgingactivitiesMember2023-07-012023-09-300000885725bsx:CorporateExpensesincludinghedgingactivitiesMember2022-07-012022-09-300000885725bsx:CorporateExpensesincludinghedgingactivitiesMember2023-01-012023-09-300000885725bsx:CorporateExpensesincludinghedgingactivitiesMember2022-01-012022-09-300000885725bsx:SpecialChargesMember2023-07-012023-09-300000885725bsx:SpecialChargesMember2022-07-012022-09-300000885725bsx:SpecialChargesMember2023-01-012023-09-300000885725bsx:SpecialChargesMember2022-01-012022-09-30bsx:business0000885725bsx:GlobalEndoscopyEndoReportingUnitMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalEndoscopyEndoReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalEndoscopyEndoReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalUrologyandPelvicHealthReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalUrologyandPelvicHealthReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalNeuromodulationNmReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalNeuromodulationNmReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMember2022-07-012022-09-300000885725bsx:MedsurgMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:MedsurgMember2023-07-012023-09-300000885725bsx:MedsurgMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:MedsurgMember2022-07-012022-09-300000885725bsx:InterventionalCardiologyTherapiesMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:InterventionalCardiologyTherapiesMember2023-07-012023-09-300000885725bsx:InterventionalCardiologyTherapiesMember2023-07-012023-09-300000885725bsx:InterventionalCardiologyTherapiesMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:InterventionalCardiologyTherapiesMember2022-07-012022-09-300000885725bsx:InterventionalCardiologyTherapiesMember2022-07-012022-09-300000885725bsx:WatchmanMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:WatchmanMember2023-07-012023-09-300000885725bsx:WatchmanMember2023-07-012023-09-300000885725bsx:WatchmanMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:WatchmanMember2022-07-012022-09-300000885725bsx:WatchmanMember2022-07-012022-09-300000885725country:USbsx:CardiacRhythmManagementMember2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:CardiacRhythmManagementMember2023-07-012023-09-300000885725bsx:CardiacRhythmManagementMember2023-07-012023-09-300000885725country:USbsx:CardiacRhythmManagementMember2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:CardiacRhythmManagementMember2022-07-012022-09-300000885725bsx:CardiacRhythmManagementMember2022-07-012022-09-300000885725bsx:ElectrophysiologyEPMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:ElectrophysiologyEPMember2023-07-012023-09-300000885725bsx:ElectrophysiologyEPMember2023-07-012023-09-300000885725bsx:ElectrophysiologyEPMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:ElectrophysiologyEPMember2022-07-012022-09-300000885725bsx:ElectrophysiologyEPMember2022-07-012022-09-300000885725bsx:GlobalCardiologyReportingUnitMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalCardiologyReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalCardiologyReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalCardiologyReportingUnitMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalCardiologyReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalCardiologyReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMembercountry:US2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalPeripheralInterventionsPiReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMember2023-07-012023-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMembercountry:US2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalPeripheralInterventionsPiReportingUnitMember2022-07-012022-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMember2022-07-012022-09-300000885725country:USbsx:CardiovascularMember2023-07-012023-09-300000885725us-gaap:NonUsMemberbsx:CardiovascularMember2023-07-012023-09-300000885725country:USbsx:CardiovascularMember2022-07-012022-09-300000885725us-gaap:NonUsMemberbsx:CardiovascularMember2022-07-012022-09-300000885725country:US2023-07-012023-09-300000885725us-gaap:NonUsMember2023-07-012023-09-300000885725country:US2022-07-012022-09-300000885725us-gaap:NonUsMember2022-07-012022-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalEndoscopyEndoReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalEndoscopyEndoReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalEndoscopyEndoReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalUrologyandPelvicHealthReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalUrologyandPelvicHealthReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalUrologyandPelvicHealthReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalNeuromodulationNmReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalNeuromodulationNmReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalNeuromodulationNmReportingUnitMember2022-01-012022-09-300000885725bsx:MedsurgMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:MedsurgMember2023-01-012023-09-300000885725bsx:MedsurgMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:MedsurgMember2022-01-012022-09-300000885725bsx:InterventionalCardiologyTherapiesMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:InterventionalCardiologyTherapiesMember2023-01-012023-09-300000885725bsx:InterventionalCardiologyTherapiesMember2023-01-012023-09-300000885725bsx:InterventionalCardiologyTherapiesMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:InterventionalCardiologyTherapiesMember2022-01-012022-09-300000885725bsx:InterventionalCardiologyTherapiesMember2022-01-012022-09-300000885725bsx:WatchmanMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:WatchmanMember2023-01-012023-09-300000885725bsx:WatchmanMember2023-01-012023-09-300000885725bsx:WatchmanMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:WatchmanMember2022-01-012022-09-300000885725bsx:WatchmanMember2022-01-012022-09-300000885725country:USbsx:CardiacRhythmManagementMember2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:CardiacRhythmManagementMember2023-01-012023-09-300000885725bsx:CardiacRhythmManagementMember2023-01-012023-09-300000885725country:USbsx:CardiacRhythmManagementMember2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:CardiacRhythmManagementMember2022-01-012022-09-300000885725bsx:CardiacRhythmManagementMember2022-01-012022-09-300000885725bsx:ElectrophysiologyEPMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:ElectrophysiologyEPMember2023-01-012023-09-300000885725bsx:ElectrophysiologyEPMember2023-01-012023-09-300000885725bsx:ElectrophysiologyEPMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:ElectrophysiologyEPMember2022-01-012022-09-300000885725bsx:ElectrophysiologyEPMember2022-01-012022-09-300000885725bsx:GlobalCardiologyReportingUnitMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalCardiologyReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalCardiologyReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalCardiologyReportingUnitMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalCardiologyReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalCardiologyReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMembercountry:US2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:GlobalPeripheralInterventionsPiReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMember2023-01-012023-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMembercountry:US2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:GlobalPeripheralInterventionsPiReportingUnitMember2022-01-012022-09-300000885725bsx:GlobalPeripheralInterventionsPiReportingUnitMember2022-01-012022-09-300000885725country:USbsx:CardiovascularMember2023-01-012023-09-300000885725us-gaap:NonUsMemberbsx:CardiovascularMember2023-01-012023-09-300000885725country:USbsx:CardiovascularMember2022-01-012022-09-300000885725us-gaap:NonUsMemberbsx:CardiovascularMember2022-01-012022-09-300000885725country:US2023-01-012023-09-300000885725us-gaap:NonUsMember2023-01-012023-09-300000885725country:US2022-01-012022-09-300000885725us-gaap:NonUsMember2022-01-012022-09-300000885725bsx:BSXReportableSegmentsMembercountry:US2023-07-012023-09-300000885725bsx:BSXReportableSegmentsMembercountry:US2022-07-012022-09-300000885725bsx:BSXReportableSegmentsMembercountry:US2023-01-012023-09-300000885725bsx:BSXReportableSegmentsMembercountry:US2022-01-012022-09-300000885725bsx:BSXReportableSegmentsMemberus-gaap:EMEAMember2023-07-012023-09-300000885725bsx:BSXReportableSegmentsMemberus-gaap:EMEAMember2022-07-012022-09-300000885725bsx:BSXReportableSegmentsMemberus-gaap:EMEAMember2023-01-012023-09-300000885725bsx:BSXReportableSegmentsMemberus-gaap:EMEAMember2022-01-012022-09-300000885725srt:AsiaPacificMemberbsx:BSXReportableSegmentsMember2023-07-012023-09-300000885725srt:AsiaPacificMemberbsx:BSXReportableSegmentsMember2022-07-012022-09-300000885725srt:AsiaPacificMemberbsx:BSXReportableSegmentsMember2023-01-012023-09-300000885725srt:AsiaPacificMemberbsx:BSXReportableSegmentsMember2022-01-012022-09-300000885725bsx:BSXReportableSegmentsMemberbsx:LatinAmericaandCanadaMember2023-07-012023-09-300000885725bsx:BSXReportableSegmentsMemberbsx:LatinAmericaandCanadaMember2022-07-012022-09-300000885725bsx:BSXReportableSegmentsMemberbsx:LatinAmericaandCanadaMember2023-01-012023-09-300000885725bsx:BSXReportableSegmentsMemberbsx:LatinAmericaandCanadaMember2022-01-012022-09-300000885725bsx:EmergingMarketsMember2023-07-012023-09-300000885725bsx:EmergingMarketsMember2022-07-012022-09-300000885725bsx:EmergingMarketsMember2023-01-012023-09-300000885725bsx:EmergingMarketsMember2022-01-012022-09-30
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | | | | |
☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2023
OR
| | | | | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File No. 1-11083
BOSTON SCIENTIFIC CORPORATION
(Exact name of registrant as specified in its charter)
| | | | | | | | |
Delaware | | 04-2695240 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
300 Boston Scientific Way, Marlborough, Massachusetts 01752-1234
(Address of Principal Executive Offices) (Zip Code)
508 683-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock, par value $0.01 per share | | BSX | | New York Stock Exchange |
0.625% Senior Notes due 2027 | | BSX27 | | New York Stock Exchange |
| | | | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | |
Large accelerated filer | ☑ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| | Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
The number of shares outstanding of Common Stock, $0.01 par value per share, as of October 31, 2023 was 1,464,982,777.
TABLE OF CONTENTS
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
(in millions, except per share data) | 2023 | | 2022 | | 2023 | | 2022 |
| | | | | | | |
Net sales | $ | 3,527 | | | $ | 3,170 | | | $ | 10,515 | | | $ | 9,440 | |
Cost of products sold | 1,101 | | | 979 | | | 3,198 | | | 2,945 | |
Gross profit | 2,426 | | | 2,191 | | | 7,317 | | | 6,495 | |
| | | | | | | |
Operating expenses: | | | | | | | |
Selling, general and administrative expenses | 1,242 | | | 1,132 | | | 3,811 | | | 3,357 | |
Research and development expenses | 356 | | | 339 | | | 1,051 | | | 993 | |
Royalty expense | 11 | | | 11 | | | 35 | | | 34 | |
Amortization expense | 208 | | | 202 | | | 620 | | | 604 | |
| | | | | | | |
Intangible asset impairment charges | 1 | | | 125 | | | 58 | | | 132 | |
Contingent consideration net expense (benefit) | 12 | | | 20 | | | 43 | | | 68 | |
Restructuring net charges (credits) | 15 | | | 4 | | | 51 | | | 18 | |
Litigation-related net charges (credits) | (111) | | | — | | | (111) | | | 42 | |
| | | | | | | |
| 1,733 | | | 1,833 | | | 5,558 | | | 5,248 | |
Operating income (loss) | 693 | | | 358 | | | 1,759 | | | 1,247 | |
| | | | | | | |
Other income (expense): | | | | | | | |
Interest expense | (66) | | | (63) | | | (200) | | | (406) | |
Other, net | (18) | | | (51) | | | (78) | | | (96) | |
Income (loss) before income taxes | 610 | | | 245 | | | 1,480 | | | 745 | |
Income tax expense (benefit) | 105 | | | 57 | | | 392 | | | 188 | |
Net income (loss) | 504 | | | 188 | | | 1,088 | | | 558 | |
Preferred stock dividends | — | | | (14) | | | (23) | | | (42) | |
Net income (loss) attributable to noncontrolling interests | (0) | | | — | | | (0) | | | — | |
Net income (loss) attributable to Boston Scientific common stockholders | $ | 505 | | | $ | 174 | | | $ | 1,065 | | | $ | 516 | |
| | | | | | | |
Net income (loss) per common share — basic | $ | 0.34 | | | $ | 0.12 | | | $ | 0.74 | | | $ | 0.36 | |
Net income (loss) per common share — diluted | $ | 0.34 | | | $ | 0.12 | | | $ | 0.73 | | | $ | 0.36 | |
| | | | | | | |
Weighted-average shares outstanding | | | | | | | |
Basic | 1,464.5 | | | 1,431.6 | | | 1,448.8 | | | 1,429.7 | |
Diluted | 1,475.0 | | | 1,440.0 | | | 1,459.1 | | | 1,438.7 | |
Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
(in millions) | 2023 | | 2022 | | 2023 | | 2022 |
Net income (loss) | $ | 504 | | | $ | 188 | | | $ | 1,088 | | | $ | 558 | |
Other comprehensive income (loss), net of tax: | | | | | | | |
Foreign currency translation adjustment | 21 | | | 26 | | | (7) | | | 39 | |
Net change in derivative financial instruments | 3 | | | 72 | | | (25) | | | 229 | |
| | | | | | | |
Net change in defined benefit pensions and other items | (0) | | | 1 | | | (5) | | | 1 | |
Other comprehensive income (loss) | 23 | | | 99 | | | (37) | | | 269 | |
Comprehensive income (loss) | $ | 528 | | | $ | 287 | | | $ | 1,051 | | | $ | 827 | |
Comprehensive income attributable to noncontrolling interests | (16) | | | — | | | (16) | | | — | |
Comprehensive income attributable to Boston Scientific common stockholders | $ | 511 | | | $ | 287 | | | $ | 1,035 | | | $ | 827 | |
Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| | | | | | | | | | | |
| As of |
(in millions, except share and per share data) | September 30, 2023 | | December 31, 2022 |
ASSETS | | | |
Current assets: | | | |
Cash and cash equivalents | $ | 952 | | | $ | 928 | |
Trade accounts receivable, net | 2,101 | | | 1,970 | |
Inventories | 2,404 | | | 1,867 | |
Prepaid income taxes | 307 | | | 264 | |
| | | |
Other current assets | 741 | | | 731 | |
Total current assets | 6,504 | | | 5,760 | |
Property, plant and equipment, net | 2,635 | | | 2,446 | |
Goodwill | 13,608 | | | 12,920 | |
Other intangible assets, net | 5,849 | | | 5,902 | |
Deferred tax assets | 3,840 | | | 3,942 | |
Other long-term assets | 1,605 | | | 1,500 | |
TOTAL ASSETS | $ | 34,043 | | | $ | 32,469 | |
| | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | |
Current liabilities: | | | |
Current debt obligations | $ | 513 | | | $ | 20 | |
Accounts payable | 929 | | | 862 | |
Accrued expenses | 2,255 | | | 2,160 | |
Other current liabilities | 882 | | | 761 | |
Total current liabilities | 4,579 | | | 3,803 | |
Long-term debt | 8,386 | | | 8,915 | |
Deferred income taxes | 91 | | | 144 | |
Other long-term liabilities | 1,858 | | | 2,035 | |
| | | |
Commitments and contingencies | | | |
| | | |
Stockholders’ equity | | | |
Preferred stock, $0.01 par value - authorized 50,000,000 shares - 0 shares issued as of September 30, 2023 and 10,062,500 shares as of December 31, 2022 | — | | | — | |
Common stock, $0.01 par value - authorized 2,000,000,000 shares - issued 1,728,158,524 shares as of September 30, 2023 and 1,696,633,993 shares as of December 31, 2022 | 17 | | | 17 | |
Treasury stock, at cost - 263,289,848 shares as of September 30, 2023 and December 31, 2022 | (2,251) | | | (2,251) | |
Additional paid-in capital | 20,573 | | | 20,289 | |
Retained earnings/(Accumulated deficit) | 315 | | | (750) | |
Accumulated other comprehensive income (loss), net of tax | 231 | | | 269 | |
Total stockholders’ equity | 18,886 | | | 17,573 | |
Noncontrolling interests | 243 | | | — | |
Total equity | 19,129 | | | 17,573 | |
TOTAL LIABILITIES AND EQUITY | $ | 34,043 | | | $ | 32,469 | |
Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended September 30, | | Nine Months Ended September 30, |
(in millions, except share data) | 2023 | | 2022 | | 2023 | | 2022 |
Preferred stock shares issued | | | | | | | |
Beginning | — | | | 10,062,500 | | | 10,062,500 | | | 10,062,500 | |
| | | | | | | |
Conversion of mandatory convertible preferred stock to common stock | — | | | — | | | (10,062,500) | | | — | |
Ending | — | | | 10,062,500 | | | — | | | 10,062,500 | |
Common stock shares issued | | | | | | | |
Beginning | 1,725,956,141 | | | 1,693,192,785 | | | 1,696,633,993 | | | 1,688,810,052 | |
| | | | | | | |
Impact of stock-based compensation plans | 2,202,383 | | | 2,204,851 | | | 7,541,629 | | | 6,587,584 | |
Conversion of mandatory convertible preferred stock to common stock | — | | | — | | | 23,982,902 | | | — | |
Ending | 1,728,158,524 | | | 1,695,397,636 | | | 1,728,158,524 | | | 1,695,397,636 | |
| | | | | | | |
Preferred stock | | | | | | | |
Beginning | $ | — | | | $ | 0 | | | $ | 0 | | | $ | 0 | |
| | | | | | | |
Conversion of mandatory convertible preferred stock to common stock | — | | | — | | | (0) | | | — | |
Ending | $ | — | | | $ | 0 | | | — | | | $ | 0 | |
Common stock | | | | | | | |
Beginning | $ | 17 | | | $ | 17 | | | $ | 17 | | | $ | 17 | |
| | | | | | | |
Impact of stock-based compensation plans | 0 | | | 0 | | | 0 | | | 0 | |
Conversion of mandatory convertible preferred stock to common stock | — | | | — | | | 0 | | | — | |
Ending | $ | 17 | | | $ | 17 | | | $ | 17 | | | $ | 17 | |
Treasury stock | | | | | | | |
Beginning | $ | (2,251) | | | $ | (2,251) | | | $ | (2,251) | | | $ | (2,251) | |
Repurchase of common stock | — | | | — | | | — | | | — | |
Ending | $ | (2,251) | | | $ | (2,251) | | | $ | (2,251) | | | $ | (2,251) | |
Additional paid-in capital | | | | | | | |
Beginning | $ | 20,441 | | | $ | 20,103 | | | $ | 20,289 | | | $ | 19,986 | |
| | | | | | | |
| | | | | | | |
Impact of stock-based compensation plans | 132 | | | 116 | | | 285 | | | 233 | |
Ending | $ | 20,573 | | | $ | 20,219 | | | $ | 20,573 | | | $ | 20,219 | |
Retained earnings/(Accumulated deficit) | | | | | | | |
Beginning | $ | (189) | | | $ | (1,050) | | | $ | (750) | | | $ | (1,392) | |
Net income (loss) | 504 | | | 188 | | | 1,088 | | | 558 | |
Net income (loss) attributable to noncontrolling interests | 0 | | | — | | | 0 | | | — | |
Preferred stock dividends | — | | | (14) | | | (23) | | | (42) | |
Ending | $ | 315 | | | $ | (876) | | | $ | 315 | | | $ | (876) | |
Accumulated other comprehensive income (loss), net of tax | | | | | | | |
Beginning | $ | 208 | | | $ | 433 | | | $ | 269 | | | $ | 263 | |
Changes in other comprehensive income (loss) | 23 | | | 99 | | | (37) | | | 269 | |
Ending | $ | 231 | | | $ | 532 | | | $ | 231 | | | $ | 532 | |
Total stockholders' equity | $ | 18,886 | | | $ | 17,640 | | | 18,886 | | | 17,640 | |
| | | | | | | |
Noncontrolling interests | | | | | | | |
Beginning | $ | 259 | | | $ | — | | | — | | | — | |
Net income (loss) attributable to noncontrolling interests | (0) | | | — | | | (0) | | | — | |
Changes in other comprehensive income (loss) | (16) | | | — | | | (16) | | | — | |
Changes to noncontrolling ownership interest | — | | | — | | | 259 | | | — | |
Ending | $ | 243 | | | $ | — | | | 243 | | | — | |
| | | | | | | |
Total equity | $ | 19,129 | | | $ | 17,640 | | | 19,129 | | | 17,640 | |
| | | | | | | |
Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
(in millions) | 2023 | | 2022 |
Net income (loss) | $ | 1,088 | | | $ | 558 | |
Adjustments to reconcile net income (loss) to cash provided by (used for) operating activities | | | |
| | | |
Depreciation and amortization | 883 | | | 842 | |
Deferred and prepaid income taxes | (74) | | | (70) | |
Stock-based compensation expense | 174 | | | 165 | |
Goodwill and other intangible asset impairment charges | 58 | | | 132 | |
Net loss (gain) on investments and notes receivable | 48 | | | 46 | |
Contingent consideration net expense (benefit) | 43 | | | 68 | |
Inventory step-up amortization | 6 | | | 32 | |
Debt extinguishment costs | — | | | 194 | |
Other, net | 33 | | | 92 | |
Increase (decrease) in operating assets and liabilities, excluding purchase accounting: | | | |
Trade accounts receivable | (164) | | | (176) | |
Inventories | (601) | | | (275) | |
Other assets | (43) | | | (298) | |
Accounts payable, accrued expenses and other liabilities | 95 | | | (590) | |
Cash provided by (used for) operating activities | 1,546 | | | 719 | |
| | | |
Investing activities: | | | |
Purchases of property, plant and equipment and internal use software | (444) | | | (376) | |
Proceeds from sale of property, plant and equipment | 4 | | | 10 | |
Payments for acquisitions of businesses, net of cash acquired | (1,018) | | | (1,542) | |
Proceeds from (payments for) investments and acquisitions of certain technologies | (89) | | | (31) | |
| | | |
Proceeds from royalty rights | 23 | | | 54 | |
Proceeds from (payments for) settlements of hedge contracts | 2 | | | 56 | |
Cash provided by (used for) investing activities | (1,521) | | | (1,828) | |
| | | |
Financing activities: | | | |
Payment of contingent consideration previously established in purchase accounting | (39) | | | (335) | |
Payments for royalty rights | (50) | | | (75) | |
Payments on short-term borrowings | — | | | (250) | |
| | | |
Net increase (decrease) in commercial paper | (4) | | | (1) | |
| | | |
| | | |
Payments on long-term borrowings and debt extinguishment costs | — | | | (3,184) | |
Proceeds from long-term borrowings, net of debt issuance costs | — | | | 3,270 | |
Cash dividends paid on preferred stock | (28) | | | (42) | |
| | | |
| | | |
Cash used to net share settle employee equity awards | (54) | | | (49) | |
Proceeds from issuances of common stock pursuant to employee stock compensation and purchase plans | 165 | | | 117 | |
Cash provided by (used for) financing activities | (10) | | | (549) | |
| | | |
Effect of foreign exchange rates on cash | (8) | | | (12) | |
| | | |
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | 7 | | | (1,671) | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 1,126 | | | 2,168 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 1,132 | | | $ | 497 | |
| | | |
Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
BOSTON SCIENTIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(SUPPLEMENTAL INFORMATION)
| | | | | | | | | | | |
| Nine Months Ended September 30, |
(in millions) | 2023 | | 2022 |
Supplemental Information | | | |
Stock-based compensation expense | $ | 174 | | | $ | 165 | |
| | | |
Non-cash impact of transferred royalty rights | (23) | | | (54) | |
| | | | | | | | | | | |
| As of September 30, |
Reconciliation to amounts within the unaudited consolidated balance sheets: | 2023 | | 2022 |
Cash and cash equivalents | $ | 952 | | | $ | 338 | |
Restricted cash and restricted cash equivalents included in Other current assets | 123 | | | 112 | |
Restricted cash equivalents included in Other long-term assets | 58 | | | 48 | |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 1,132 | | | $ | 497 | |
Refer to notes to the unaudited consolidated financial statements. Amounts may not foot due to rounding.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE A – BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Boston Scientific Corporation have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and with the instructions to Form 10-Q and Article 10 of Regulation S-X, and they do not include all of the information and footnotes required by GAAP for complete financial statements. When used in this report, the terms, "we," "us," "our," and "the Company" mean Boston Scientific Corporation and its divisions and subsidiaries. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for fair presentation have been included. Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. Accordingly, our unaudited consolidated financial statements and footnotes thereto should be read in conjunction with our audited consolidated financial statements and footnotes thereto included in Item 8 of our most recent Annual Report on Form 10-K.
The accompanying unaudited consolidated financial statements include the accounts of the Company's wholly owned- subsidiaries and entities for which the Company has a controlling financial interest. All intercompany balances and transactions have been eliminated in consolidation. In the first quarter of 2023, we acquired a majority stake investment in Acotec Scientific Holdings Limited (Acotec) and have elected to consolidate their financial statements on a one quarter lag.
Amounts reported in millions within this Quarterly Report on Form 10-Q are computed based on the amounts in thousands. As a result, the sum of the components may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying unrounded amounts.
Subsequent Events
We evaluate events occurring after the date of our accompanying unaudited consolidated balance sheet for potential recognition or disclosure in our financial statements. Those items requiring recognition in the financial statements have been recorded and disclosed accordingly.
Those items requiring disclosure (non-recognized subsequent events) in the financial statements have been disclosed accordingly. Refer to Note H – Commitments and Contingencies for further details.
NOTE B – ACQUISITIONS, DIVESTITURES AND STRATEGIC INVESTMENTS
Our accompanying unaudited consolidated financial statements include the operating results for acquired entities from the respective dates of acquisition. We have not presented supplemental pro forma financial information for completed acquisitions or divestitures given their results are not material to our accompanying unaudited consolidated financial statements. Further, transaction costs were immaterial to our accompanying unaudited consolidated financial statements and were expensed as incurred.
On September 19, 2023, we announced our entry into a definitive agreement to acquire 100 percent of Relievant Medsystems, Inc. (Relievant Medsystems), a privately held medical technology company that developed and commercialized the Intracept® Intraosseous Nerve Ablation System to treat vertebrogenic pain, a form of chronic low back pain. The transaction price consists of an upfront cash payment of $850 million and additional contingent payments based on sales performance over the next three years. The transaction is expected to close in the first half of 2024, subject to customary closing conditions. Following the closing of the acquisition, we plan to integrate the Relievant Medsystems business into our Neuromodulation division.
2023 Acquisitions
On April 4, 2023, we completed our acquisition of 100 percent of the outstanding equity of Apollo Endosurgery, Inc. (Apollo), a public company which offers a portfolio of devices used during endoluminal procedures to close gastrointestinal defects, manage gastrointestinal complications and aid in weight loss for patients suffering from obesity. The transaction consisted of an upfront cash payment of $636 million, net of cash acquired. The Apollo business is being integrated into our Endoscopy division.
On February 20, 2023, we completed the acquisition of a majority stake investment in Acotec, a publicly traded Chinese manufacturer of drug-coated balloons used in the treatment of vascular and other diseases. We acquired approximately 65 percent of the outstanding shares of Acotec, for an upfront cash payment of HK$20.00 per share, or $519 million at foreign currency exchange rates at closing. The Acotec portfolio complements our existing Peripheral Interventions portfolio.
Purchase Price Allocation
We accounted for these transactions as business combinations in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 805, Business Combinations (FASB ASC Topic 805). The preliminary purchase prices were comprised of the amounts presented below:
| | | | | | | | | | |
(in millions) | Acotec(1) | Apollo | | |
Payment for acquisition, net of cash acquired (2) | $ | 381 | | $ | 636 | | | |
| $ | 381 | | $ | 636 | | | |
(1) Excludes approximately $140 million of cash on hand at the closing of the transaction
(2) Represents majority stake investment in Acotec
We recorded the assets acquired, liabilities assumed and specific to Acotec, the noncontrolling interest, at their respective fair values as of the closing of the transaction. The preliminary purchase price allocations were comprised of the following components and the final determination of the fair value of certain assets and liabilities will be completed within the measurement period in accordance with FASB ASC Topic 805:
| | | | | | | | |
(in millions) | Acotec | Apollo |
Goodwill | $ | 338 | | $ | 379 | |
Amortizable intangible assets | 334 | | 248 | |
| | |
Other assets acquired | 93 | | 50 | |
Liabilities assumed | (48) | | (33) | |
Net deferred tax liabilities | (77) | | (7) | |
Fair value of noncontrolling interest | (259) | | — | |
| $ | 381 | | $ | 636 | |
The fair value of Acotec's noncontrolling interest was based on the publicly traded market value of the remaining 35 percent of the outstanding shares we did not acquire as of the transaction date and is presented within Stockholders' equity within our accompanying unaudited consolidated balance sheets. Goodwill was primarily established for Acotec due to opportunities for collaboration in research and development, manufacturing and commercial strategies and for Apollo due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies, none of which is deductible for tax purposes.
We allocated a portion of the purchase price to the specific intangible asset categories as follows:
| | | | | | | | | | | | | | | | | |
| Amount Assigned (in millions) | | Weighted Average Amortization Period (in years) | | Risk-Adjusted Discount Rates used in Purchase Price Allocation |
| | | | | |
Acotec: | | | | | |
Amortizable intangible assets: | | | | | |
Technology-related | $ | 308 | | | 11 | | 14% |
Customer relationships | 15 | | | 11 | | 14% |
Other intangible assets | 11 | | | 13 | | 14% |
| | | | | |
| | | | | |
| $ | 334 | | | | | |
| | | | | |
Apollo: | | | | | |
Amortizable intangible assets: | | | | | |
Technology-related | $ | 222 | | | 11 | | 12% |
Customer relationships | 26 | | | 11 | | 12% |
| | | | | |
| $ | 248 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
2022 Acquisition
On February 14, 2022, we completed our acquisition of Baylis Medical Company Inc. (Baylis Medical), a privately-held company which developed the radiofrequency (RF) NRG™ and VersaCross™ Transseptal Platforms as well as a family of guidewires, sheaths and dilators used to support left heart access, which expanded our electrophysiology and structural heart product portfolios. The transaction consisted of an upfront cash payment of $1.463 billion, net of cash acquired, subject to closing adjustments. We are integrating the Baylis Medical business into our Cardiology division.
Purchase Price Allocation
We accounted for the acquisition of Baylis Medical as a business combination in accordance with FASB ASC Topic 805. The final purchase price was comprised of the amount presented below:
| | | | | |
(in millions) | |
Payment for acquisition, net of cash acquired | $ | 1,463 | |
| |
| |
| $ | 1,463 | |
We recorded the assets acquired and liabilities assumed at their respective fair values as of the acquisition date. The final purchase price allocation was comprised of the following components:
| | | | | | |
(in millions) | | |
Goodwill | $ | 988 | | |
Amortizable intangible assets | 657 | | |
| | |
Other assets acquired | 112 | | |
| | |
Liabilities assumed | (287) | | |
Net deferred tax liabilities | (7) | | |
| $ | 1,463 | | |
Goodwill was primarily established due to synergies expected to be gained from leveraging our existing operations, as well as revenue and cash flow projections associated with future technologies, and was deductible for tax purposes.
We allocated a portion of the purchase price to the specific intangible asset categories as follows:
| | | | | | | | | | | | | | | | | |
| Amount Assigned (in millions) | | Weighted Average Amortization Period (in years) | | Risk-Adjusted Discount Rates used in Purchase Price Allocation |
| | | | | |
Amortizable intangible assets: | | | | | |
Technology-related | $ | 622 | | | 11 | | 11% |
Other intangible assets | 36 | | | 11 | | 11% |
| $ | 657 | | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
| | | | | |
Contingent Consideration
None of our acquisitions that closed during 2023 or 2022 contained contingent consideration arrangements. Changes in the fair value of our contingent consideration liability during the first nine months of 2023 associated with prior period acquisitions were as follows:
| | | | | |
(in millions) | |
Balance as of December 31, 2022 | $ | 149 | |
| |
| |
Contingent consideration net expense (benefit) | 43 | |
Contingent consideration payments | (73) | |
Balance as of September 30, 2023 | $ | 119 | |
The payments made during the first nine months of 2023 primarily related to our 2021 acquisition of Farapulse, Inc. As of September 30, 2023, the maximum amount of future contingent consideration (undiscounted) that we could be required to pay associated with our completed acquisitions was approximately $380 million. Refer to Note B – Acquisitions and Strategic Investments to our audited financial statements contained in Item 8. Financial Statements and Supplementary Data of our most recent Annual Report on Form 10-K for additional information.
The recurring Level 3 fair value measurements of our contingent consideration liability that we expect to be required to settle include the following significant unobservable inputs:
| | | | | | | | | | | | | | | | | | | | | | | | | |
Contingent Consideration Liability | Fair Value as of September 30, 2023 | Valuation Technique | Unobservable Input | Range | Weighted Average(1) | | |
R&D, Regulatory and Commercialization-based Milestones | $13 million | Discounted Cash Flow | Discount Rate | 1% | - | 2% | 1% | | |
Probability of Payment | 10% | - | 25% | 22% | | |
Projected Year of Payment | 2023 | - | 2025 | 2024 | | |
Revenue-based Payments | $106 million | Discounted Cash Flow | Discount Rate | 6% | - | 14% | 6% | | |
Probability of Payment | 100% | 100% | | |
Projected Year of Payment | 2023 | - | 2024 | 2023 | | |
| | | | | | | | | |
| | | | | | | |
| | | | | | | |
(1) Unobservable inputs were weighted by the relative fair value of the contingent consideration liability. For projected year of payment, the amount represents the median of the inputs and is not a weighted average.
Projected contingent payment amounts related to research and development (R&D), regulatory and commercialization-based milestones and revenue-based payments are discounted back to the current period, primarily using a discounted cash flow model. Significant increases or decreases in projected revenues, probabilities of payment, discount rates or the time until payment is made would have resulted in a significantly lower or higher fair value measurement as of September 30, 2023.
Strategic Investments
The aggregate carrying amount of our strategic investments was comprised of the following:
| | | | | | | | | | | |
| As of |
(in millions) | September 30, 2023 | | December 31, 2022 |
Equity method investments | $ | 220 | | | $ | 188 | |
Measurement alternative investments(1, 2) | 207 | | | 219 | |
| $ | 427 | | | $ | 407 | |
(1) Measurement alternative investments are privately-held equity securities without readily determinable fair values that are measured at cost less impairment, if any, adjusted to fair value for any observable price changes in orderly transactions for the identical or a similar investment of the same issuer, recognized in Other, net within our accompanying unaudited consolidated statements of operations.
(2) Includes publicly-held securities and convertible notes measured at fair value with changes in fair value recognized in Other, net within our accompanying unaudited consolidated statements of operations.
These investments are classified as Other long-term assets within our accompanying unaudited consolidated balance sheets, in accordance with GAAP and our accounting policies.
As of September 30, 2023, the cost of our aggregated equity method investments exceeded our share of the underlying equity in net assets by $236 million, which represents amortizable intangible assets, in-process research and development (IPR&D), goodwill and deferred tax liabilities.
NOTE C – GOODWILL AND OTHER INTANGIBLE ASSETS
The gross carrying amount of goodwill and other intangible assets and the related accumulated amortization for intangible assets subject to amortization and accumulated goodwill impairment charges are as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| As of September 30, 2023 | | As of December 31, 2022 |
(in millions) | Gross Carrying Amount | | Accumulated Amortization/ Write-offs | | Gross Carrying Amount | | Accumulated Amortization/ Write-offs |
Technology-related | $ | 12,935 | | | $ | (7,916) | | | $ | 12,397 | | | $ | (7,378) | |
Patents | 477 | | | (384) | | | 486 | | | (394) | |
Other intangible assets | 2,036 | | | (1,472) | | | 1,960 | | | (1,400) | |
Amortizable intangible assets | $ | 15,447 | | | $ | (9,772) | | | $ | 14,843 | | | $ | (9,173) | |
| | | | | | | |
Goodwill | $ | 23,508 | | | $ | (9,900) | | | $ | 22,820 | | | $ | (9,900) | |
| | | | | | | |
IPR&D | $ | 54 | | | | | $ | 112 | | | |
Technology-related | 120 | | | | | 120 | | | |
Indefinite-lived intangible assets | $ | 174 | | | | | $ | 232 | | | |
The increase in our balance of goodwill and amortizable intangible assets is related primarily to our majority stake investment in Acotec completed in the first quarter of 2023 and our acquisition of Apollo completed in the second quarter of 2023.
The following represents a roll-forward of our goodwill balance by global reportable segment:
| | | | | | | | | | | | | | | | | | | |
(in millions) | MedSurg | | Cardiovascular | | | | Total |
As of December 31, 2022 | $ | 4,237 | | | $ | 8,684 | | | | | $ | 12,920 | |
| | | | | | | |
| | | | | | | |
Goodwill acquired | 379 | | | 338 | | | | | 717 | |
Impact of foreign currency fluctuations and purchase price adjustments | (4) | | | (25) | | | | | (29) | |
As of September 30, 2023 | $ | 4,611 | | | $ | 8,997 | | | | | $ | 13,608 | |
Goodwill and Intangible Asset Impairments
We did not record any goodwill impairment charges in the first nine months of 2023 or 2022. We test our goodwill balances in the second quarter of each year as of April 1 for impairment, or more frequently if impairment indicators are present or changes in circumstances suggest an impairment may exist.
We assess goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment, referred to as a component. We identified the following reporting units for purposes of our annual goodwill impairment test: Interventional Cardiology, Rhythm Management, Peripheral Interventions, Endoscopy, Urology and Neuromodulation. Based on the criteria prescribed in FASB ASC Topic 350, we aggregated the Interventional Cardiology Therapies and Watchman components of our Cardiology operating segment into a single Interventional Cardiology reporting unit and aggregated the Cardiac Rhythm Management and Electrophysiology components of our Cardiology operating segment into a single Rhythm Management reporting unit.
In the second quarter of 2023, we performed our annual goodwill impairment test utilizing both the qualitative and quantitative approach described in FASB ASC Topic 350, Intangibles - Goodwill and Other (FASB ASC Topic 350). The qualitative approach was used for testing reporting units where fair value has historically exceeded carrying value by greater than 100 percent, and all other reporting units were tested using the quantitative approach. For the reporting units tested using the qualitative approach, after assessing the totality of events, it was determined that it was not more likely than not that the fair value of the reporting units was less than their carrying value, and it was not deemed necessary to proceed to the quantitative test. For the reporting unit tested using the quantitative approach, we determined that the fair value of the reporting unit exceeded the carrying value and concluded that goodwill was not impaired or at risk of impairment. There were no impairment indicators in the third quarter of 2023 that necessitated an interim impairment test.
In 2023, we recorded Intangible asset impairment charges of less than $1 million in the third quarter and recorded $58 million in the first nine months. In 2022, we recorded Intangible asset impairment charges of $125 million in the third quarter and $132 million in the first nine months. The impairment charges recorded in the first nine months of 2023 were primarily associated with the cancellation of an IPR&D program due to the incremental time and cost to complete the program and bring the technology to market. The impairment charges recorded in the third quarter and first nine months of 2022 were primarily associated with amortizable technology-related intangible assets that were initially established following our acquisition of Vertiflex, Inc., which was integrated into our Neuromodulation business, resulting from lower revenue projections due to reimbursement challenges.
We review intangible assets subject to amortization quarterly to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. We test our indefinite-lived intangible assets at least annually during the third quarter for impairment and reassess their classification as indefinite-lived assets. In addition, we review our indefinite-lived intangible assets for classification and impairment more frequently if impairment indicators exist. During the third quarter of 2023, we performed our annual IPR&D impairment test and evaluated our indefinite-lived core technology assets for impairment and concluded the assets were not impaired. We also verified that the classification of IPR&D projects and our indefinite-lived core technology assets recognized within our unaudited consolidated balance sheets continues to be appropriate.
Refer to Note A – Significant Accounting Policies to our audited financial statements contained in Item 8. Financial Statements and Supplementary Data of our most recent Annual Report on Form 10-K for further discussion of our annual goodwill and intangible asset impairment testing.
NOTE D – HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
Derivative Instruments and Hedging Activities
We address market risk from changes in foreign currency exchange rates and interest rates through risk management programs which include the use of derivative and nonderivative financial instruments. We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and actively monitoring counterparty credit ratings. We also employ master netting arrangements that limit the risk of counterparty non-payment on a particular settlement date to the net gain that would have otherwise been received from the counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency.
Currency Hedging Instruments
Our risk from changes in currency exchange rates consists primarily of monetary assets and liabilities, forecasted intercompany and third-party transactions, and net investments in certain subsidiaries. We manage currency exchange rate risk at a consolidated level to reduce the cost of hedging by taking advantage of offsetting transactions. We employ derivative and nonderivative instruments, primarily forward currency contracts, to reduce the risk to our earnings and cash flows associated with changes in currency exchange rates.
The success of our currency risk management program depends, in part, on forecast transactions denominated primarily in euro, British pound sterling, Swiss franc, Japanese yen, Chinese renminbi and Australian dollar. We may experience unanticipated currency exchange gains or losses to the extent the actual activity is different than forecast. In addition, changes in currency exchange rates related to any unhedged transactions may impact our earnings and cash flows.
Certain of our currency derivative instruments are designated as cash flow hedges under FASB ASC Topic 815, Derivatives and Hedging (FASB ASC Topic 815), and are intended to protect the U.S. dollar value of forecasted transactions. The gain or loss on a derivative instrument designated as a cash flow hedge is recorded in the Net change in derivative financial instruments component of Other comprehensive income (loss), net of tax (OCI) within our unaudited consolidated statements of comprehensive income (loss) until the underlying third-party transaction occurs. When the underlying third-party transaction occurs, we recognize the gain or loss in earnings within Cost of products sold in our unaudited consolidated statements of operations. In the event the hedging relationship is no longer effective, or if the occurrence of the hedged forecast transaction becomes no longer probable, we reclassify the gains or losses within Accumulated other comprehensive income (loss), net of tax (AOCI) to earnings at that time. The cash flows related to the derivative instruments designated as cash flow hedges are reported as operating activities in our consolidated statements of cash flows.
We designate certain euro-denominated debt as net investment hedges to hedge a portion of our net investments in certain of our entities with functional currencies denominated in the euro. As of September 30, 2023 and December 31, 2022, we designated as a net investment hedge our €900 million in aggregate principal amount of 0.625% euro-denominated senior notes issued in November 2019 and due in 2027 (2027 Notes). For these nonderivative instruments, we defer recognition of the foreign currency remeasurement gains and losses within the Foreign currency translation adjustment (CTA) component of Other comprehensive income (loss), net of tax. We reclassify these gains and losses to current period earnings within Other, net in our accompanying unaudited consolidated statements of operations only when the hedged item affects earnings, which would occur upon disposal or substantial liquidation of the underlying foreign subsidiary.
We also use forward currency contracts that are not part of designated hedging relationships as a part of our strategy to manage our exposure to currency exchange rate risk related to monetary assets and liabilities and related forecast transactions. These non-designated currency forward contracts have an original time to maturity consistent with the hedged currency transaction exposures, generally less than one year, and are marked-to-market with changes in fair value recorded to earnings within Other, net within our accompanying unaudited consolidated statements of operations.
Interest Rate Hedging Instruments
Our interest rate risk relates primarily to U.S. dollar and euro-denominated borrowings partially offset by U.S. dollar cash investments. We use interest rate derivative instruments to mitigate the risk to our earnings and cash flows associated with exposure to changes in interest rates. Under these agreements, we and the counterparty, at specified intervals, exchange the difference between fixed and floating interest amounts calculated by reference to an agreed-upon notional principal amount. We designate these derivative instruments either as fair value or cash flow hedges in accordance with FASB ASC Topic 815.
We had no interest rate derivative instruments designated as cash flow hedges outstanding as of September 30, 2023 or December 31, 2022. In the event that we designate outstanding interest rate derivative instruments as cash flow hedges, we record the changes in the fair value of the derivatives within OCI until the underlying hedged transaction occurs.
The following table presents the contractual amounts of our hedging instruments outstanding:
| | | | | | | | | | | | | | | | | | | | |
(in millions) | | FASB ASC Topic 815 Designation | | As of |
| September 30, 2023 | | December 31, 2022 |
Forward currency contracts | | Cash flow hedge | | $ | 2,343 | | | $ | 2,725 | |
Forward currency contracts | | Net investment hedge | | 333 | | | 365 | |
Foreign currency-denominated debt(1) | | Net investment hedge | | 997 | | | 997 | |
Forward currency contracts | | Non-designated | | 3,328 | | | 4,235 | |
| | | | | | |
Total Notional Outstanding | | | | $ | 7,002 | | | $ | 8,321 | |
(1) Foreign currency-denominated debt is the €900 million debt principal associated with our 2027 Notes designated as a net investment hedge.
As of September 30, 2023, the remaining time to maturity is within 36 months for all forward currency contracts designated as cash flow hedges and generally less than one year for all non-designated forward currency contracts. The forward currency contracts designated as net investment hedges generally mature between one and three years. The euro-denominated debt principal designated as a net investment hedge has a contractual maturity of December 1, 2027.
The following presents the effect of our derivative and nonderivative instruments designated as cash flow and net investment hedges under FASB ASC Topic 815 in our accompanying unaudited consolidated statements of operations. Refer to Note M – Changes in Other Comprehensive Income for the total amounts relating to derivative and nonderivative instruments presented within our accompanying unaudited consolidated statements of comprehensive income (loss).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effect of Hedging Relationships on Accumulated Other Comprehensive Income |
| Amount Recognized in OCI on Hedges | | Unaudited Consolidated Statements of Operations(1) | | Amount Reclassified from AOCI into Earnings |
(in millions) | Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | | Location of Amount Reclassified and Total Amount of Line Item | | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax |
Three Months Ended September 30, 2023 |
Forward currency contracts | | | | | | | | |
Cash flow hedges | $ | 54 | | $ | (12) | | $ | 42 | | | Cost of products sold | $ | 1,101 | | | $ | (51) | | $ | 11 | | $ | (39) | |
Net investment hedges(2) | 12 | | (3) | | 9 | | | Interest expense | 66 | | | (2) | | 1 | | (2) | |
Foreign currency-denominated debt | | | | | | | | |
Net investment hedges(3) | 26 | | (6) | | 20 | | | Other, net | 18 | | | — | | — | | — | |
Interest rate derivative contracts | | | | | | | | |
Cash flow hedges | — | | — | | — | | | Interest expense | 66 | | | 1 | | (0) | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effect of Hedging Relationships on Accumulated Other Comprehensive Income |
| Amount Recognized in OCI on Hedges | | Unaudited Consolidated Statements of Operations(1) | | Amount Reclassified from AOCI into Earnings |
(in millions) | Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | | Location of Amount Reclassified and Total Amount of Line Item | | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax |
Three Months Ended September 30, 2022 |
Forward currency contracts | | | | | | | | |
Cash flow hedges | $ | 153 | | $ | (34) | | $ | 119 | | | Cost of products sold | $ | 979 | | | $ | (61) | | $ | 14 | | $ | (47) | |
Net investment hedges(2) | 14 | | (16) | | (2) | | | Interest expense | 63 | | | (3) | | 1 | | (2) | |
Foreign currency-denominated debt | | | | | | | |
Net investment hedges(3) | 56 | | (13) | | 43 | | | Other, net | 51 | | | — | | — | | — | |
Interest rate derivative contracts | | | | | | | | |
Cash flow hedges | — | | — | | — | | | Interest Expense | 63 | | | 1 | | — | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effect of Hedging Relationships on Accumulated Other Comprehensive Income |
| Amount Recognized in OCI on Hedges | | Unaudited Consolidated Statements of Operations(1) | | Amount Reclassified from AOCI into Earnings |
(in millions) | Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | | Location of Amount Reclassified and Total Amount of Line Item | | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax |
Nine Months Ended September 30, 2023 |
Forward currency contracts | | | | | | | | |
Cash flow hedges | $ | 141 | | $ | (32) | | $ | 109 | | | Cost of products sold | $ | 3,198 | | | $ | (176) | | $ | 40 | | $ | (136) | |
Net investment hedges (2) | 40 | | (9) | | 31 | | | Interest expense | 200 | | | (7) | | 2 | | (6) | |
Foreign currency-denominated debt | | | | | | | | |
Net investment hedges (3) | 8 | | (2) | | 6 | | | Other, net | 78 | | | — | | — | | — | |
Interest rate derivative contracts | | | | | | | | |
Cash flow hedges | | | — | | | Interest expense | 200 | | | 2 | | (0) | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Effect of Hedging Relationships on Accumulated Other Comprehensive Income |
| Amount Recognized in OCI on Hedges | | Unaudited Consolidated Statements of Operations(1) | | Amount Reclassified from AOCI into Earnings |
(in millions) | Pre-Tax Gain (Loss) | Tax Benefit (Expense) | Gain (Loss) Net of Tax | | Location of Amount Reclassified and Total Amount of Line Item | | Pre-Tax (Gain) Loss | Tax (Benefit) Expense | (Gain) Loss Net of Tax |
Nine Months Ended September 30, 2022 |
Forward currency contracts | | | | | | | | |
Cash flow hedges | $ | 412 | | $ | (93) | | $ | 319 | | | Cost of products sold | $ | 2,945 | | | $ | (132) | | $ | 30 | | $ | (102) | |
Net investment hedges (2) | 63 | | (14) | | 48 | | | Interest expense | 406 | | | (7) | | 2 | | (6) | |
Foreign currency-denominated debt | | | | | | | |
Net investment hedges (3) | 142 | | (32) | | 110 | | | Other, net | 96 | | | — | | — | | — | |
Interest rate derivative contracts | | | | | | | | |
Cash flow hedges | — | | — | | — | | | Interest expense | 406 | | | 15 | | (3) | | 12 | |
(1) In all periods presented in the table above, the pre-tax (gain) loss amounts reclassified from AOCI to earnings represent the effect of the hedging relationships on earnings.
(2) For our outstanding forward currency contracts designated as net investment hedges, the net gain or loss reclassified from AOCI to earnings as a reduction of Interest expense represents the straight-line amortization of the excluded component as calculated at the date of designation. This initial value of the excluded component has been excluded from the assessment of effectiveness in accordance with FASB ASC Topic 815. In the current and prior period, we did not recognize any gains or losses on the components included in the assessment of hedge effectiveness in earnings.
(3) For our outstanding euro-denominated debt principal designated as a net investment hedge, the change in fair value attributable to changes in the spot rate is recorded in the CTA component of OCI. No amounts were reclassified from AOCI to current period earnings.
As of September 30, 2023, pre-tax net gains or losses for our derivative instruments designated, or previously designated, as cash flow and net investment hedges under FASB ASC Topic 815 that may be reclassified from AOCI to earnings within the next twelve months are presented below:
| | | | | | | | | | | | | | | | | | | | |
(in millions) | | FASB ASC Topic 815 Designation | | Location on Unaudited Consolidated Statements of Operations | | Amount of Pre-Tax Gain (Loss) that may be Reclassified to Earnings |
Designated Hedging Instrument | | | |
Forward currency contracts | | Cash flow hedge | | Cost of products sold | | $ | 221 | |
Forward currency contracts | | Net investment hedge | | Interest expense | | 9 | |
Interest rate derivative contracts | | Cash flow hedge | | Interest expense | | (2) | |
Net gains and losses on currency hedge contracts not designated as hedging instruments offset by net gains and losses from currency transaction exposures are presented below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Location on Unaudited Consolidated Statements of Operations | | Three Months Ended September 30, | | Nine Months Ended September 30, |
(in millions) | | | 2023 | | 2022 | | 2023 | | 2022 |
Net gain (loss) on currency hedge contracts | | Other, net | | $ | 10 | | | $ | (29) | | | $ | 13 | | | $ | (93) | |
Net gain (loss) on currency transaction exposures | | Other, net | | (16) | | | (8) | | | (42) | | | 48 | |
Net currency exchange gain (loss) | | | | $ | (6) | | | $ | (38) | | | $ | (30) | | | $ | (45) | |
Fair Value Measurements
FASB ASC Topic 815 requires all derivative and nonderivative instruments to be recognized at their fair values as either assets or liabilities on the balance sheet. We determine the fair value of our derivative and nonderivative instruments using the framework prescribed by FASB ASC Topic 820, Fair Value Measurements and Disclosures (FASB ASC Topic 820) and considering the estimated amount we would receive or pay to transfer these instruments at the reporting date with respect to current currency exchange rates, interest rates, the creditworthiness of the counterparty for unrealized gain positions and our own creditworthiness for unrealized loss positions. In certain instances, we may utilize financial models to measure fair value of our derivative and nonderivative instruments. In doing so, we use inputs that include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The following are the balances of our derivative and nonderivative assets and liabilities:
| | | | | | | | | | | | | | | | | | | | |
| | Location on Unaudited Consolidated Balance Sheets(1) | | As of |
(in millions) | | | September 30, 2023 | | December 31, 2022 |
Derivative and Nonderivative Assets: | | | | | | |
Designated Hedging Instruments | | | | | | |
Forward currency contracts | | Other current assets | | $ | 198 | | | $ | 196 | |
Forward currency contracts | | Other long-term assets | | 155 | | | 149 | |
| | | | 353 | | | 345 | |
Non-Designated Hedging Instruments | | | | | | |
Forward currency contracts | | Other current assets | | 43 | | | 36 | |
| | | | | | |
Total Derivative and Nonderivative Assets | | | | $ | 396 | | | $ | 381 | |
| | | | | | |
Derivative and Nonderivative Liabilities: | | | | | | |
Designated Hedging Instruments | | | | | | |
Forward currency contracts | | Other current liabilities | | $ | 1 | | | $ | — | |
Forward currency contracts | | Other long-term liabilities | | 1 | | | 1 | |
Foreign currency-denominated debt(2) | | Long-term debt | | 946 | | | 952 | |
| | | | | | |
| | | | 947 | | | 953 | |
Non-Designated Hedging Instruments | | | | | | |
Forward currency contracts | | Other current liabilities | | 30 | | | 52 | |
Total Derivative and Nonderivative Liabilities | | | | $ | 977 | | | $ | 1,005 | |
(1) We classify derivative and nonderivative assets and liabilities as current when the settlement date of the contract is one year or less.
(2) Foreign currency-denominated debt is the €900 million debt principal associated with our 2027 Notes designated as a net investment hedge. A portion of this notional is subject to de-designation and re-designation based on changes in the underlying hedged item.
Recurring Fair Value Measurements
On a recurring basis, we measure certain financial assets and financial liabilities at fair value based upon quoted market prices. Where quoted market prices or other observable inputs are not available, we apply valuation techniques to estimate fair value. FASB ASC Topic 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The category of a financial asset or a financial liability within the valuation hierarchy is based upon the lowest level of input that is significant to the measurement of fair value. The three levels of the hierarchy are defined as follows:
•Level 1 – Inputs to the valuation methodology are quoted market prices for identical assets or liabilities.
•Level 2 – Inputs to the valuation methodology are other observable inputs, including quoted market prices for similar assets or liabilities and market-corroborated inputs.
•Level 3 – Inputs to the valuation methodology are unobservable inputs based on management’s best estimate of inputs market participants would use in pricing the asset or liability at the measurement date, including assumptions about risk.