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PRNewswire 24-Oct-2018 6:30 AM
PR Newswire
MARLBOROUGH, Mass., Oct. 24, 2018
MARLBOROUGH, Mass., Oct. 24, 2018 /PRNewswire/ -- Boston Scientific Corporation (NYSE:BSX) generated sales of $2.393 billion during the third quarter ended September 30, 2018. This represents growth of 7.7 percent on a reported basis, 9.1 percent on an operational1 basis and 8.7 percent on an organic2 basis, all compared to the prior year period. The company reported GAAP earnings of $432 million or $0.31 per share (EPS), compared to GAAP earnings of $283 million or $0.20 per share a year ago, and achieved adjusted earnings per share of $0.35 for the period, compared to $0.31 a year ago.
"Our strong results reflect our global team's focused efforts to execute our category leadership strategy and advance the standard of care," said Mike Mahoney, chairman and chief executive officer, Boston Scientific. "Through internal research and tuck-in acquisitions, we continue to bring meaningful innovations to market, enabling our customers to deliver life-changing care to millions of patients around the world."
Third quarter financial results and recent developments:
1. |
Operational revenue growth excludes the impact of foreign currency fluctuations. |
2. |
Organic revenue growth excludes the impact of foreign currency fluctuations and sales from the recent acquisitions of NxThera, Inc. and Claret Medical, Inc. with no prior period related net sales. |
3. |
We define Emerging Markets as including certain countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. Currently, we include 20 countries in our definition of Emerging Markets. |
4. |
The LOTUS Valve system is currently not available for use or sale. |
Net sales for the third quarter by business and region:
Change |
||||||||||||||||||||||
Three Months Ended |
Reported Basis |
Less: Impact |
Operational |
Less: Impact of |
Organic Basis |
|||||||||||||||||
(in millions) |
2018 |
2017 |
||||||||||||||||||||
Endoscopy |
$ |
443 |
$ |
403 |
10.1% |
(1.5)% |
11.6% |
—% |
11.6% |
|||||||||||||
Urology and Pelvic Health |
303 |
274 |
10.7% |
(1.2)% |
11.9% |
1.9% |
10.0% |
|||||||||||||||
MedSurg* |
746 |
676 |
10.3% |
(1.4)% |
11.7% |
0.7% |
11.0% |
|||||||||||||||
Cardiac Rhythm Management |
475 |
463 |
2.3% |
(0.9)% |
3.2% |
—% |
3.2% |
|||||||||||||||
Electrophysiology |
76 |
71 |
7.6% |
(1.0)% |
8.6% |
—% |
8.6% |
|||||||||||||||
Neuromodulation |
189 |
154 |
22.8% |
(0.7)% |
23.5% |
—% |
23.5% |
|||||||||||||||
Rhythm and Neuro* |
740 |
689 |
7.4% |
(0.9)% |
8.3% |
—% |
8.3% |
|||||||||||||||
Interventional Cardiology |
615 |
589 |
4.4% |
(1.9)% |
6.3% |
0.7% |
5.6% |
|||||||||||||||
Peripheral Interventions |
293 |
268 |
9.2% |
(1.5)% |
10.7% |
—% |
10.7% |
|||||||||||||||
Cardiovascular |
908 |
857 |
5.9% |
(1.8)% |
7.7% |
0.5% |
7.2% |
|||||||||||||||
Net Sales |
$ |
2,393 |
$ |
2,222 |
7.7% |
(1.4)% |
9.1% |
0.4% |
8.7% |
|||||||||||||
*Prior period segment amounts revised in accordance with ASC 280, Segment Reporting, to reflect the reclassification of Neuromodulation from the MedSurg segment to the Rhythm and Neuro segment, effective January 1, 2018. |
Change |
||||||||||||||||
Three Months Ended |
Reported Basis |
Less: Impact |
Operational |
|||||||||||||
(in millions) |
2018 |
2017 |
||||||||||||||
U.S. |
$ |
1,375 |
$ |
1,257 |
9.4% |
—% |
9.4% |
|||||||||
EMEA** |
498 |
474 |
5.1% |
(2.3)% |
7.4% |
|||||||||||
APAC** |
425 |
401 |
6.2% |
(1.9)% |
8.1% |
|||||||||||
Latin America and Canada |
94 |
91 |
3.7% |
(14.3)% |
18.0% |
|||||||||||
Net Sales |
$ |
2,393 |
$ |
2,222 |
7.7% |
(1.4)% |
9.1% |
|||||||||
Emerging Markets |
$ |
263 |
$ |
236 |
11.1% |
(8.6)% |
19.7% |
|||||||||
**Regional totals reflect the reclassification of Middle East and Africa from the former AMEA region to Europe, effective January 1, 2018. |
||||||||||||||||
Amounts may not add due to rounding. Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. |
||||||||||||||||
Sales growth rates that exclude the impact of foreign currency fluctuations and/or the impact of recent acquisitions are not prepared in accordance with U.S. GAAP. |
||||||||||||||||
Guidance for Full Year and Fourth Quarter 2018
The company now estimates revenue for the full year 2018 to be in a range of $9.787 to $9.827 billion (compared to prior guidance of $9.800 to $9.880 billion), which versus the prior year period represents a growth range of approximately 8 to 9 percent on a reported basis and growth of approximately 7 percent on an organic basis excluding the impact of foreign currency fluctuations and contribution of approximately 80 basis points from recent acquisitions with no prior period related net sales. The company now estimates income on a GAAP basis in a range of $1.08 to $1.10 per share (compared to prior guidance of $0.99 to $1.03 per share) and estimates adjusted earnings, excluding amortization expense, intangible asset impairment charges, acquisition-related net charges (credits), restructuring and restructuring-related net charges (credits), litigation-related net charges, certain investment impairments and certain discrete tax items, in a range of $1.38 to $1.40 per share (compared to prior guidance of $1.37 to $1.41 per share).
The company estimates sales for the fourth quarter of 2018 to be in a range of $2.525 to $2.565 billion, which versus the prior year period represents a growth range of approximately 5 to 7 percent on a reported basis and a growth range of approximately 6 to 7 percent on an organic basis, excluding the impact of foreign currency fluctuations and contribution of approximately 120 basis points from recent acquisitions with no prior period related net sales. The company estimates earnings on a GAAP basis in a range of $0.15 to $0.17 per share and adjusted earnings, excluding amortization expense, acquisition-related net charges (credits) and restructuring and restructuring-related net charges (credits), in a range of $0.30 to $0.32 per share. Both GAAP and adjusted earnings per share include $0.06 of reinvestment of the $0.06 Q2 2018 benefit from the finalization of the IRS Stipulation of Settled Issues.
Conference Call Information
Boston Scientific management will be discussing these results with analysts on a conference call today at 8:00 a.m. EDT. The company will webcast the call to interested parties through its website: www.bostonscientific.com. Please see the website for details on how to access the webcast. The webcast will be available for approximately one year on the Boston Scientific website.
About Boston Scientific
Boston Scientific transforms lives through innovative medical solutions that improve the health of patients around the world. As a global medical technology leader for more than 35 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare. For more information, visit www.bostonscientific.com and connect on Twitter and Facebook.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like "anticipate," "expect," "project," "believe," "plan," "estimate," "intend," "aiming" and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our expected net sales, GAAP, operational and organic revenue growth rates, GAAP earnings and adjusted earnings for the fourth quarter and full year 2018, our financial performance, our business plans and our positioning for revenue and earnings growth. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this press release. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.
Risks and uncertainties that may cause such differences include, among other things: future economic, political, competitive, reimbursement and regulatory conditions, new product introductions and the market acceptance of those products, markets for our products, expected pricing environment, expected procedural volumes, the closing and integration of acquisitions, clinical trial results, demographic trends, intellectual property rights, litigation, financial market conditions, the execution and effect of our restructuring program, the execution and effect of our business strategy, including our cost-savings and growth initiatives and future business decisions made by us and our competitors. New risks and uncertainties may arise from time to time and are difficult to predict. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item IA - Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A - Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this press release.
Note: Amounts reported in millions within this press release are computed based on the amounts in thousands. As a result, the sum of the components reported in millions 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 numbers in dollars. Prior year balances were subject to rounding.
Use of Non-GAAP Financial Information
A reconciliation of the company's non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the company's use of these non-GAAP financial measures, is included in the exhibits attached to this press release.
CONTACT: |
||||
Media: |
Kate Haranis |
Investors: |
Susie Lisa, CFA |
|
508-683-6585 (office) |
508-683-5565 (office) |
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Media Relations |
Investor Relations |
|||
Boston Scientific Corporation |
Boston Scientific Corporation |
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BOSTON SCIENTIFIC CORPORATION |
|||||||||||||
CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS |
|||||||||||||
(Unaudited) |
|||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||
in millions, except per share data |
2018 |
2017 |
2018 |
2017 |
|||||||||
Net sales |
$ |
2,393 |
$ |
2,222 |
$ |
7,262 |
$ |
6,640 |
|||||
Cost of products sold |
672 |
637 |
2,084 |
1,919 |
|||||||||
Gross profit |
1,720 |
1,585 |
5,179 |
4,721 |
|||||||||
Operating expenses: |
|||||||||||||
Selling, general and administrative expenses |
870 |
800 |
2,616 |
2,408 |
|||||||||
Research and development expenses |
289 |
254 |
825 |
734 |
|||||||||
Royalty expense |
17 |
16 |
52 |
50 |
|||||||||
Amortization expense |
148 |
139 |
437 |
424 |
|||||||||
Intangible asset impairment charges |
— |
3 |
35 |
3 |
|||||||||
Contingent consideration expense (benefit) |
(13) |
(4) |
(12) |
(78) |
|||||||||
Restructuring charges (credits) |
3 |
12 |
20 |
17 |
|||||||||
Litigation-related net charges (credits) |
18 |
(12) |
18 |
196 |
|||||||||
1,333 |
1,208 |
3,992 |
3,754 |
||||||||||
Operating income (loss) |
388 |
377 |
1,187 |
967 |
|||||||||
Other income (expense): |
|||||||||||||
Interest expense |
(58) |
(57) |
(177) |
(172) |
|||||||||
Other, net |
126 |
(11) |
116 |
(89) |
|||||||||
Income (loss) before income taxes |
456 |
309 |
1,126 |
706 |
|||||||||
Income tax expense (benefit) |
24 |
26 |
(159) |
(13) |
|||||||||
Net income (loss) |
$ |
432 |
$ |
283 |
$ |
1,285 |
$ |
719 |
|||||
Net income (loss) per common share - basic |
$ |
0.31 |
$ |
0.21 |
$ |
0.93 |
$ |
0.53 |
|||||
Net income (loss) per common share - assuming dilution |
$ |
0.31 |
$ |
0.20 |
$ |
0.92 |
$ |
0.52 |
|||||
Weighted-average shares outstanding |
|||||||||||||
Basic |
1,382.8 |
1,372.0 |
1,380.0 |
1,369.1 |
|||||||||
Assuming dilution |
1,403.9 |
1,394.1 |
1,399.8 |
1,391.8 |
BOSTON SCIENTIFIC CORPORATION |
||||||||||||||||||||||||||||
NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS |
||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||
Three Months Ended September 30, 2018 |
||||||||||||||||||||||||||||
in millions, except per share data |
Cost of Products Sold |
SG&A Expenses |
R&D Expenses |
Operating Income (Loss) |
Pre-Tax Income (Loss) |
Net Income (Loss) |
Impact |
|||||||||||||||||||||
GAAP net income (loss) |
$ |
672 |
$ |
870 |
$ |
289 |
$ |
388 |
$ |
456 |
$ |
432 |
$ |
0.31 |
||||||||||||||
Non-GAAP adjustments: |
||||||||||||||||||||||||||||
Amortization expense |
— |
— |
— |
148 |
148 |
132 |
0.09 |
|||||||||||||||||||||
Acquisition-related net charges (credits) |
(9) |
(19) |
(29) |
44 |
(98) |
(107) |
(0.08) |
|||||||||||||||||||||
Restructuring and restructuring-related net charges (credits) |
(10) |
(2) |
— |
15 |
15 |
12 |
0.01 |
|||||||||||||||||||||
Litigation-related net charges (credits) |
— |
— |
— |
18 |
18 |
14 |
0.01 |
|||||||||||||||||||||
Investment impairment charges |
— |
— |
— |
— |
3 |
3 |
0.00 |
|||||||||||||||||||||
Adjusted net income |
$ |
653 |
$ |
849 |
$ |
261 |
$ |
613 |
$ |
542 |
$ |
485 |
$ |
0.35 |
||||||||||||||
Three Months Ended September 30, 2017 |
||||||||||||||||||||||||||||
in millions, except per share data |
Cost of Products Sold |
SG&A Expenses |
R&D Expenses |
Operating Income (Loss) |
Pre-Tax Income (Loss) |
Net Income (Loss) |
Impact |
|||||||||||||||||||||
GAAP net income (loss) |
$ |
637 |
$ |
800 |
$ |
254 |
$ |
377 |
$ |
309 |
$ |
283 |
$ |
0.20 |
||||||||||||||
Non-GAAP adjustments: |
||||||||||||||||||||||||||||
Amortization expense |
— |
— |
— |
139 |
139 |
122 |
0.09 |
|||||||||||||||||||||
Intangible asset impairment charges |
— |
— |
— |
3 |
3 |
3 |
0.00 |
|||||||||||||||||||||
Acquisition-related net charges (credits) |
(8) |
(14) |
(7) |
25 |
25 |
14 |
0.01 |
|||||||||||||||||||||
Restructuring and restructuring-related net charges (credits) |
(11) |
(3) |
— |
26 |
26 |
20 |
0.02 |
|||||||||||||||||||||
Litigation-related net charges (credits) |
— |
— |
— |
(12) |
(12) |
(10) |
(0.01) |
|||||||||||||||||||||
Adjusted net income |
$ |
618 |
$ |
783 |
$ |
247 |
$ |
558 |
$ |
490 |
$ |
432 |
$ |
0.31 |
||||||||||||||
An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document. |
BOSTON SCIENTIFIC CORPORATION |
||||||||||||||||||||||||||||
NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS |
||||||||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||||||||
Nine Months Ended September 30, 2018 |
||||||||||||||||||||||||||||
in millions, except per share data |
Cost of Products Sold |
SG&A Expenses |
R&D Expenses |
Operating Income (Loss) |
Pre-Tax Income (Loss) |
Net |
Impact |
|||||||||||||||||||||
GAAP net income (loss) |
$ |
2,084 |
$ |
2,616 |
$ |
825 |
$ |
1,187 |
$ |
1,126 |
$ |
1,285 |
$ |
0.92 |
||||||||||||||
Non-GAAP adjustments: |
||||||||||||||||||||||||||||
Amortization expense |
— |
— |
— |
437 |
437 |
380 |
0.27 |
|||||||||||||||||||||
Intangible asset impairment charges |
— |
— |
— |
35 |
35 |
31 |
0.02 |
|||||||||||||||||||||
Acquisition-related net charges (credits) |
(23) |
(52) |
(51) |
114 |
(68) |
(79) |
(0.06) |
|||||||||||||||||||||
Restructuring and restructuring-related net charges (credits) |
(33) |
(5) |
— |
58 |
58 |
47 |
0.03 |
|||||||||||||||||||||
Litigation-related net charges (credits) |
— |
— |
— |
18 |
18 |
14 |
0.01 |
|||||||||||||||||||||
Investment impairment charges |
— |
— |
— |
— |
7 |
7 |
0.01 |
|||||||||||||||||||||
Discrete tax items |
— |
— |
— |
— |
— |
(177) |
(0.13) |
|||||||||||||||||||||
Adjusted net income |
$ |
2,027 |
$ |
2,559 |
$ |
775 |
$ |
1,849 |
$ |
1,613 |
$ |
1,508 |
$ |
1.08 |
||||||||||||||
Nine Months Ended September 30, 2017 |
||||||||||||||||||||||||||||
in millions, except per share data |
Cost of Products Sold |
SG&A Expenses |
R&D Expenses |
Operating Income (Loss) |
Pre-Tax Income (Loss) |
Net |
Impact |
|||||||||||||||||||||
GAAP net income (loss) |
$ |
1,919 |
$ |
2,408 |
$ |
734 |
$ |
967 |
$ |
706 |
$ |
719 |
$ |
0.52 |
||||||||||||||
Non-GAAP adjustments: |
||||||||||||||||||||||||||||
Amortization expense |
— |
— |
— |
424 |
424 |
365 |
0.26 |
|||||||||||||||||||||
Intangible asset impairment charges |
— |
— |
— |
3 |
3 |
3 |
0.00 |
|||||||||||||||||||||
Acquisition-related net charges (credits) |
(18) |
(35) |
(15) |
(10) |
(1) |
(20) |
(0.01) |
|||||||||||||||||||||
Restructuring and restructuring-related net charges (credits) |
(35) |
(9) |
— |
61 |
61 |
48 |
0.03 |
|||||||||||||||||||||
Litigation-related net charges (credits) |
— |
— |
— |
196 |
196 |
123 |
0.09 |
|||||||||||||||||||||
Investment impairment charges |
— |
— |
— |
— |
53 |
34 |
0.02 |
|||||||||||||||||||||
Adjusted net income |
$ |
1,866 |
$ |
2,364 |
$ |
719 |
$ |
1,641 |
$ |
1,442 |
$ |
1,272 |
$ |
0.91 |
||||||||||||||
An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document. |
BOSTON SCIENTIFIC CORPORATION |
||||||||||||||||||||||||||||||||||||||||
Q4 and Full Year 2018 Estimated Revenue Growth Rates
Q4 2018 Estimate |
Full Year 2018 Estimate |
Prior Full Year 2018 Estimate |
||||||||||||||||||||||||||||||||||||||
(Low) |
(High) |
(Low) |
(High) |
(Low) |
(High) |
|||||||||||||||||||||||||||||||||||
Estimated GAAP sales growth |
5% |
7% |
8% |
9% |
8% |
9% |
||||||||||||||||||||||||||||||||||
Less: Estimated impact of foreign currency |
(1)% |
0% |
1% |
2% |
2% |
2% |
||||||||||||||||||||||||||||||||||
Estimated sales growth, organic* |
6% |
7% |
7% |
7% |
6% |
7% |
||||||||||||||||||||||||||||||||||
*Q4 2018 Estimate excludes contribution of approximately 120 basis points from NxThera, Claret and Augmenix. Full Year 2018 Estimate excludes contribution of approximately 80 basis points from Symetis SA, NxThera, Claret and Augmenix. Prior Full Year 2018 Estimate excluded contribution of approximately 40 basis points from Symetis. |
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Q4 and Full Year 2018 Earnings per Share Guidance
Q4 2018 Estimate |
Full Year 2018 |
Prior Full Year |
|||||||||||||||||||
(Low) |
(High) |
(Low) |
(High) |
(Low) |
(High) |
||||||||||||||||
GAAP results** |
$ |
0.15 |
$ |
0.17 |
$ |
1.08 |
$ |
1.10 |
$ |
0.99 |
$ |
1.03 |
|||||||||
Estimated amortization expense |
0.10 |
0.10 |
0.36 |
0.36 |
0.36 |
0.36 |
|||||||||||||||
Intangible asset impairment charges |
— |
— |
0.02 |
0.02 |
0.02 |
0.02 |
|||||||||||||||
Estimated acquisition-related net charges (credits) |
0.03 |
0.03 |
(0.03) |
(0.03) |
0.05 |
0.05 |
|||||||||||||||
Estimated restructuring and restructuring-related net charges |
0.02 |
0.02 |
0.06 |
0.06 |
0.08 |
0.08 |
|||||||||||||||
Litigation-related net charges (credits) |
— |
— |
0.01 |
0.01 |
0.00 |
0.00 |
|||||||||||||||
Investment impairment charges |
— |
— |
0.01 |
0.01 |
0.00 |
0.00 |
|||||||||||||||
Discrete tax items |
— |
— |
(0.13) |
(0.13) |
(0.13) |
(0.13) |
|||||||||||||||
Adjusted results** |
$ |
0.30 |
$ |
0.32 |
$ |
1.38 |
$ |
1.40 |
$ |
1.37 |
$ |
1.41 |
|||||||||
**Q4 Estimated GAAP and Adjusted results include $0.06 of reinvestment of the $0.06 Q2 2018 benefit from the finalization of the IRS Stipulation of Settled Issues. |
|||||||||||||||||||||
Prior Guidance Estimate - Q3 2018 Earnings per Share
Q3 2018 Estimate |
||||||
(Low) |
(High) |
|||||
GAAP results |
$ |
0.21 |
$ |
0.23 |
||
Estimated amortization expense |
0.08 |
0.08 |
||||
Estimated acquisition-related net charges (credits) |
0.02 |
0.02 |
||||
Estimated restructuring and restructuring-related net charges (credits) |
0.02 |
0.02 |
||||
Adjusted results |
$ |
0.33 |
$ |
0.35 |
||
Use of Non-GAAP Financial Measures
To supplement our unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (earnings) and adjusted net income (earnings) per share that exclude certain amounts, operational net sales, which exclude the impact of foreign currency fluctuations and organic net sales, which exclude the impact of foreign currency fluctuations and the impact of recent material acquisitions. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.
To calculate adjusted net income (earnings) and adjusted net income (earnings) per share we exclude certain charges (credits) from GAAP net income, including amortization expense, intangible asset impairment charges, acquisition-related net charges (credits), restructuring and restructuring-related net charges (credits), litigation-related net charges (credits), certain investment impairment charges and certain discrete tax items. Amounts are tax effected at the Company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate." Please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report filed on Form 10-K with the Securities and Exchange Commission for an explanation of each of these adjustments and the reasons for excluding each item. The following is an explanation of each incremental or revised adjustment type that management excluded as part of these non-GAAP financial measures, since our most recent Annual Report on Form 10-K, as well as the reason for excluding each individual item:
The GAAP financial measures most directly comparable to adjusted net income and adjusted net income per share are GAAP net income and GAAP net income per share.
To calculate operational net sales, which exclude the impact of foreign currency fluctuations, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. To calculate organic net sales, we remove the impact of recent material acquisitions with no prior period related net sales from operational net sales. The GAAP financial measure most directly comparable to operational net sales and organic net sales is net sales on a GAAP basis.
Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included in the accompanying schedules.
Management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in our business, to assess our performance relative to our competitors and to establish operational goals and forecasts that are used in allocating resources. In addition, management uses these non-GAAP financial measures to further its understanding of the performance of our operating segments. With the exception of the impact of recent acquisitions, the adjustments excluded from our non-GAAP financial measures are consistent with those excluded from our operating segments' measures of net sales and profit or loss. These adjustments are excluded from the segment measures reported to our chief operating decision maker that are used to make operating decisions and assess performance.
We believe that presenting adjusted net income and adjusted net income per share, operational net sales and organic net sales, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for its operational decision-making and allows investors to see our results "through the eyes" of management. We further believe that providing this information assists our investors in understanding our operating performance and the methodology used by management to evaluate and measure such performance.
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SOURCE Boston Scientific Corporation