Boston Scientific Earnings: New Product Cycles and Medical Utilization Drove Strong Results

Narrow-moat Boston Scientific’s BSX second-quarter results demonstrated similar strength as the double-digit growth seen in the previous quarter, and we plan to modestly raise our fair value estimate on slightly higher 2023 and 2024 projections. Boston delivered top-line growth in the double digits again, with quarterly operational revenue growth of 12% fueled by endoscopy, cardiology, and peripheral intervention. Boston kept a tight rein on expenses in the second quarter, with manufacturing and R&D expense falling slightly short of our expectations, but this was offset by slightly higher-than-expected SG&A.

Despite new competitive pressure from Abbott’s Amulet, Boston continues to exert dominance in the left atrial appendage market. Boston saw its second-quarter Watchman franchise increase 27% year over year, while Amulet wasn’t far behind at 25%. However, Watchman was growing off a significantly larger base than Amulet. As with many of these interventional cardiology devices, practitioners are quite receptive to trying them out once they are available. But, if the newcomer doesn’t deliver meaningfully superior clinical outcomes or a better user experience that is typically shorter or more predictable, it can be difficult to overtake established competitors.

We’re also eager to see initial clinical trial data on Farapulse, expected at next month’s European cardiology conference. This will be the first glimpse at how pulsed field ablation stacks up to radiofrequency or cryo ablation. Considering the established body of data attesting to the efficacy of ablation for atrial fibrillation, simply demonstrating that Farapulse is just as effective as radiofrequency ablation but is safer to surrounding tissue would be enough to make this option attractive to electrophysiologists, in our view.